District of New Jersey

NEWARK, N.J. – Four people were charged today for allegedly smuggling counterfeit Apple iPhones, iPads and iPods, and Sony camcorders, from China for sale in the United States, U.S. Attorney Paul Fishman of the District of New Jersey, Assistant Attorney General Leslie Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Kevin Kelly of Homeland Security Investigations (HSI) in Newark and Bergen County Prosecutor John Molinelli announced.

The eight-count indictment charges Andreina Becerra, 30, a Venezuelan national, and Roberto Volpe, 33, an Italian national, both of Miami; Jianhua Li, 40, a Chinese national and resident of Guangzhou, China; and Rosario La Marca, 52, an Italian national and resident of Naples, Italy, with importing and trafficking fake iPhones, iPads and iPods bearing counterfeit Apple trademarks, and fake camcorders bearing counterfeit Sony trademarks, as well as smuggling, structuring and international money laundering.

The defendants were arrested last week in a coordinated, multi-district effort by HSI in Los Angeles, Miami and Newark. The defendants were arraigned this afternoon before U.S. District Court Judge Kevin McNulty Newark federal court.

According to the indictment:

From July 2009 through February 2014 the defendants allegedly conspired to smuggle into the United States from China more than 40,000 electronic devices and accessories. The estimated manufacturer’s suggested retail prices for an equivalent number of genuine items would have exceeded $15 million. The devices were often shipped separately from the labels bearing counterfeit trademarks in order avoid detection by Customs and Border Protection. The devices were then labeled and packaged after they passed through customs.

The defendants then allegedly re-shipped the devices to conspirators all over the United States. Proceeds from the sales of the devices were funneled back to the defendants’ accounts in Florida and New Jersey via structured cash deposits – broken into multiple deposits of less than $10,000 each to avoid bank reporting requirements – and a portion of the proceeds was then transferred to conspirators in Italy, further disguising the source of the funds.

According to the indictment, the defendants made more than 100 illegal wire transfers totaling more than $1.1 million to Li’s Hong Kong accounts to facilitate their criminal activity.

This case was jointly investigated by the HSI Newark Seaport Investigations Group and the Bergen County Prosecutor’s Office White Collar Crimes Squad, with significant assistance from Europol and Italy’s Guardia di Finanza.

The government is represented by Assistant U.S. Attorneys Leslie Schwartz and Sarah Devlin of the District of New Jersey, Senior Counsel Evan Williams and Rudy Orjales of the Criminal Division’s Computer Crime and Intellectual Property Section.

The enforcement action announced today is one of many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). The IP Task Force was created to combat the growing number of  domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation, and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state, and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders.  To learn more about the IP Task Force, go to: www.justice.gov/dag/iptaskforce/.

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

CAMDEN, N.J. – Two principals of a Pennsylvania construction company working on a project at the Ft. Dix military base in Burlington County, New Jersey, were sentenced today for separate charges concerning employee extortion, the hired assault of a site manager and bribes to secure federally subsidized construction projects, U.S. Attorney Paul J. Fishman announced.

Leonard Santos, 68, of Yardley, Pennsylvania, owner of Sands Mechanical Inc. of Bristol, Pennsylvania, was sentenced to 85 months in prison. Santos previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to Count One of an indictment charging him with conspiracy to obtain kickbacks from public works employees and Count Three, charging him with causing persons to travel in interstate commerce to commit a crime of violence.

Alex Rabinovich, 59, of Richboro, Pennsylvania, Sands Mechanical’s general manager, was sentenced to three years’ probation, including four months of home confinement. Rabinovich previously pleaded guilty before Judge Rodriguez to Count Four of the indictment, which charged a conspiracy to make payoffs to a contractor’s representative for receiving favorable treatment when bidding on federal construction projects. Judge Rodriguez imposed both sentences today in Camden federal court.

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

Between November 2009 and September 2010, Santos operated Sands Mechanical Inc. as a subcontractor on the restoration and rehabilitation of the Marine Corps Reserve Training Center at Joint Base-McGuire-Dix-Lakehurst in Burlington County. Sands provided HVAC and plumbing services. The general contractor was a company headquartered in Marriotsville, Maryland. In order to increase the profitability of the project, Santos, with the aid of his son-in-law Richard Cottone, 40, of Windsor, Pennsylvania, and Michael Featherston, 45, of Bridgeton, New Jersey, demanded that certain employees kickback a percentage of their weekly paychecks or face termination.

In February 2010, the U.S. Department of Labor’s Wage and Hour Division (WHD) was tipped off that the Sands employees were being forced to kickback portions of their salary and were not being paid the prevailing wage for Burlington County. Santos conceded that Sands failed to pay the proper prevailing wage to its employees and agreed to repay $80,000 to those deprived employees. Santos cut settlement checks to those employees who were owed back wages. However, Cottone and Featherston warned those employees not to cash their settlement checks. Instead, Cottone and Featherston took the employees to a nearby check cashing business, where they endorsed their checks over to Cottone, who cashed them and returned the funds to Santos.

In addition, the general contractor’s site manager was routinely critical of the work performance of Sands’ employees, which, at times, necessitated that work be done over. As a result, the site manager was targeted by Santos, Cottone and others by having his truck torched in front of his residence at 4 a.m. on May 17, 2010. This tactic failed to warn off the site manager. Santos admitted that he later condoned physically incapacitating the site manager so that he could no longer supervise the work site and offered $5,000 to whomever Cottone recruited to carry out the attack. On June 10, 2010, an assailant recruited by Cottone opted instead to hit the site manager with his car and called Cottone for permission to carry out the deed. After Cottone gave the “go-ahead” the assailant and two friends ran down the site manager while he was riding his bike. The victim sustained multiple serious injuries. 

Also, from November 2009 through January 2013, Rabinovich and others paid a Philadelphia contractor’s representative to get “last looks” at other competitors’ bids for federally subsidized projects. This allowed Sands Mechanical to successfully underbid other subcontractors. A total of $46,200 in bribes/kickbacks was owed for 10 subcontracts awarded to Sands Mechanical. By the summer of 2012, approximately $15,000 was still outstanding for the last two contracts. On two occasions, in November and December 2012, Rabinovich was caught on videotape giving a total of $4,156 in cash to the contractor’s representative to pay down the amounts still due and owing.

In addition to the prison term, Judge Rodriguez ordered Santos to serve three years of supervised release and pay restitution of $10,000.

Cottone and Featherston have both pleaded guilty to their roles in the scheme and were sentenced to 33 months and 12 months in prison, respectively.

U.S. Attorney Fishman credited special agents of the U.S. Department of Labor Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia; the Department of Labor-Wage and Hour Division, under the direction of Acting Regional Administrator Mark Watson Jr.; the Naval Criminal Investigative Service, under the direction of Special Agent in Charge Leo S. Lamont, Northeast field office; and the Air Force Office of Special Investigations, under the direction of Special Agent Seth Neville, detachment commander, Joint Base McGuire-Dix-Lakehurst.

The government is represented by Senior Litigation Counsel V. Grady O’Malley and Assistant U.S. Attorney Andrew Bruck of the U.S. Attorney’s Office Organized Crime-Gangs Unit in Newark.

Defense counsel: Guillermo R. Arango Jr. Esq., New Brunswick, New Jersey

NEWARK, N.J. - A Newark federal grand jury returned an indictment today charging the owner of a Ramsey, New Jersey, car dealership with defrauding customers and banks out of  $1.7 million, U.S. Attorney Paul Fishman announced.

Afzal Khan, a/k/a “Bobby Khan,” 32, of Egg Harbor Township, New Jersey, is charged with five counts of wire fraud. Khan, who was initially charged by complaint on Dec. 23, 2014, is still at large.

According to the indictment filed today:

From December 2013 through September 2014, Khan, through his car dealership,

Emporio Motor Group of Ramsey, engaged in a number of fraudulent transactions involving Rolls Royce, Lamborghini, Porsche and other vehicles. As part of his scheme, Khan obtained loans from the auto finance division of a large bank for cars that he never delivered, but for which the purchaser was still responsible. Khan also obtained loans for cars that neither he nor Emporio had the title. As a result, the purchasers of these cars were still liable for the loan, but could not register them. In addition, Khan offered to sell cars for individuals on consignment but thereafter did not return the cars or provide any money to the purchaser from the sale.

Altogether, Kahn fraudulently obtained 21 loans totaling more than $1.7 million.

Each count of wire fraud is punishable by a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited law enforcement officers of the FBI under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Bergen County Prosecutor’s Office under the direction of Prosecutor John L. Molinelli; and the Borough of Ramsey Police Department under the direction of Chief of Police Bryan H. Gurney, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

 

NEWARK, N.J. – A Jersey City, New Jersey, man today admitted conspiring to traffic turtle species designated as threatened under New Jersey state law, U.S. Attorney Paul J. Fishman announced.

Patrick Elfers, 48, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of conspiracy to violate the Lacey Act, which prohibits the interstate sale of wildlife with a market value of more $350 that has been taken or possessed in violation of any state law or regulation. He was released on $50,000 unsecured bond.

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

New Jersey’s Endangered and Nongame Species Act prohibits the taking, possession, transportation, exportation or sale of spotted turtles, North American wood turtles and Eastern box turtles, among other species. New Jersey has designated the North American wood turtle as threatened because it is a vulnerable species that could become endangered. The spotted turtle and Eastern box turtle are listed as species of special concern.

Elfers admitted that, from December 2011 through March 2014, he possessed various turtle species, including spotted turtles, North American wood turtles, and Eastern box turtles, at his home in Jersey City without the required permits under New Jersey State law. He advertised the turtles on wildlife trade websites to prospective purchasers in New Jersey and elsewhere. Elfers also shipped turtles to purchasers in New York State by tying them in tube socks to restrict their movement and packing them in boxes that were neither designed nor appropriate for the shipment of live animals.

The charge to which Elfers pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Sept. 29, 2015.

As part of his plea agreement, Elfers must forfeit more than 40 turtles and pay a fine of $30,450 to the U.S. Fish and Wildlife Service Lacey Act Reward Fund. He must also relinquish 10 Eastern box turtles and any additional turtles or tortoises in his possession, including three Gulf Coast box turtles, one African spur thigh tortoise, and one elongated tortoise.

U.S. Attorney Fishman credited special agents of the U.S. Fish and Wildlife Service, Office of Law Enforcement, under the direction Resident Special Agent in Charge Preston Fant, with the investigation leading to today’s plea.

The Government is represented by Assistant United States Attorney Kathleen P. O'Leary of the U.S. Attorney's Office Health Care and Government Fraud Unit in Newark.

Defense counsel:  James R. Lisa Esq., Newark

NEWARK, N.J. – A Hudson County, New Jersey, contractor today admitted conspiring to rig the process for the selection of contractors for projects run by the Union City Community Development Agency, causing losses of at least $40,000, U.S. Attorney Paul J. Fishman announced.

Stanley Parzych, 62, of Jersey City, New Jersey, pleaded guilty to an information charging him with one count of conspiring with agents of a local government agency to obtain by fraud funds provided by Union City. Parzych entered his guilty plea before U.S. District Judge William H. Walls in Newark federal court.

According to documents in this case and statements made in court:

Between June 2007 and November 2010, Parzych owned American Construction, a company located in Jersey City. During that same time period, there was another contractor named Joseph Lado (Lado) who owned a construction company in Union City called Lado Construction LLC. There was also an individual who was an inspector (Inspector 1) at the Union City Community Development Agency (UCCDA), which was a government agency that received funds from the U.S. Department of Housing and Urban Development (HUD) under a federal block grant that provided funding for, among other things, home improvement projects and sidewalk replacement projects.

Parzych conspired with Lado and Inspector 1 to rig the competitive process to perform sidewalk replacement projects and residential rehabilitation projects in favor of certain contractors, including Lado Construction, by submitting false and materially misleading proposals. On many occasions Parzych provided Lado with phony proposals from American Construction that were higher than Lado’s proposals. Sometimes he provided Lado with blank proposal forms from American Construction, which Lado later completed listing amounts that were higher than Lado Construction’s proposals for the same work. Under both of those scenarios, Lado would then submit American Construction’s phony higher-priced proposals and Lado’s own proposals to the UCCDA in order to obtain projects, and ultimately, HUD grant funds, from the UCCDA for the completion of the projects.

The conspiracy charge to which Parzych pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Parzych is scheduled to be sentenced on Oct. 7, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent In Charge Christina Scaringi, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Barbara R. Llanes of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Defense counsel: Daniel J. Welsh, Jersey City, New Jersey

NEWARK, N.J. – A heroin supplier to the Grape Street Crips street gang today admitted conspiring to distribute hundreds of grams of heroin in and around Newark, U.S. Attorney Paul J. Fishman announced today.

Gabriel Henderson, 35, of Newark, pleaded guilty before the U.S. District Judge Esther Salas in Newark federal court to an information charging him with one count of conspiring to distribute heroin.

In May 2015, over the course of three weeks, 50 alleged members and associates of the Grape Street Crips were charged in criminal complaints that alleged drug-trafficking, physical assaults, and witness intimidation. The charges were the result of a long-running investigation led by the DEA and FBI, in conjunction with the Essex County Prosecutor’s Office, the Newark Police Department and Essex County Sheriff’s Office Bureau of Narcotics. During the investigation, 71 defendants were charged with federal and state charges.

In addition to controlling drug-trafficking across large swaths of Newark, the Grape Street Crips routinely engaged in acts of violence – including murder, shootings, aggravated assaults, and witness intimidation. A federal grand jury has returned a second superseding indictment charging two of the defendants – Kwasi Mack, a/k/a “Welchs,” 26, of Belleville, New Jersey, and Corey Batts, a/k/a “C-Murder,” a/k/a “Cee,” 30, of Newark, two leaders of the Grape Street Crips – with numerous violent crimes in aid of racketeering, including attempted murder and conspiracy to commit murder.

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

Henderson admitted that between December 2014 and May 2015, he conspired with others to distribute brick quantities of heroin to members and associates of the Grape Street Crips.  Henderson and his conspirators sold heroin in and around the Pennington Court public-housing complex located on Pennington Street and the John W. Hyatt public-housing complex located on Hawkins Street, both in Newark.

U.S. Attorney Fishman credited special agents of the DEA, under the direction of Special Agent in Charge Carl Kotowski in Newark, and special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to the charges. He also thanked prosecutors and detectives of the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; police officers and detectives of the Newark Police Department, under the direction of Director Eugene Venable and Chief Anthony Campos; and the Essex County Sheriff’s Office, under the direction of Sheriff Armando B. Fontoura, for their work on the investigation.

The drug conspiracy count to which Henderson pleaded guilty carries a maximum potential sentence of 40 years in prison. Sentencing is scheduled for Oct. 19, 2015.

The government is represented by Assistant U.S. Attorneys Osmar J. Benvenuto, Elizabeth M. Harris, and Barry Kamar of the Criminal Division in Newark.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Safe Streets Task Force, a partnership, a partnership between federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.

The charges and allegations contained in the federal criminal complaints and indictment are merely accusations, and the remaining defendants are presumed innocent unless and until proven guilty.

Defense counsel: Howard B. Brownstein, Union City, New Jersey

TRENTON, N.J. – A former Department of Veterans Affairs (VA) employee who worked as a supervisory engineer at the VA’s campus in East Orange, New Jersey, was sentenced today to 46 months in prison for accepting more than $1.2 million in kickback payments in connection with VA contracts awarded to companies with which he had relationships, and to engaging in a scheme to defraud the VA by claiming one of those companies was owned by a service-disabled veteran when it was not, U.S. Attorney Paul J. Fishman announced.

Jarod Machinga, 45, of Hopewell, New Jersey, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of honest services wire fraud, one count of wire fraud and one count of engaging in a monetary transaction in criminally derived property. Judge Cooper imposed the sentence today in Trenton federal court.

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

As a supervisory engineer, Machinga had the authority and influence to direct certain VA construction contracts to particular companies. Machinga partnered with a person – identified in the information as “Individual 1” – to set up three companies that could be used to obtain VA work. He then directed more than $6 million worth of VA construction projects to those companies. Machinga admitted he accepted $1,277,205 in kickbacks in exchange for his official action and influence between 2007 and July 2012.

Congress has established a program through which certain VA contracts are reserved for small businesses that are owned and controlled by service-disabled veterans. One of Individual 1’s companies entered into such a contract with the VA after Machinga falsely represented to the VA that it was a service-disabled veteran-owned small business – even though Individual 1 was not a veteran. Machinga then used his official position and influence at the VA to award such a contract to Company 1. The company was paid more than $3 million by the VA in connection with the contract.

Machinga also admitted that for many of the projects awarded to Individual 1’s companies, he recruited other contractors to perform the work so the companies were able to keep the money paid to them without having to incur the expense of actually completing the projects.

In addition to the prison term, Judge Cooper sentenced Machinga to serve one year of supervised release.

U.S. Attorney Fishman credited special agents of the Department of Veterans Affairs, Office of Inspector General, under the direction of Special Agent in Charge Jeffrey Hughes; the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Vikas Khanna of the U.S. Attorney’s Office Special Prosecutions Division and Peter Gaeta of the U.S. Attorney’s Office Asset Forfeiture and Money Laundering Unit in Newark.

Defense counsel: Fortunato N. Perri Jr. Esq., Philadelphia

NEWARK, N.J. – A North Bergen, New Jersey, man today admitted paying cash bribes to a West New York, New Jersey, fire official to eliminate millions of dollars in outstanding fines and penalties on buildings with fire code violations, U.S. Attorney Paul J. Fishman announced.

Victor Coca, 48, pleaded guilty before U.S. District Judge Esther Salas to Count One and Count Two of an indictment charging him with paying bribes to a local government employee.

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

Coca was the owner and president of a general contracting company in West New York. Two buildings in West New York had outstanding fines for fire code violations. The first building, located on Bergenline Avenue and owned by a friend of his, had approximately $14,500 in fines and penalties for outstanding fire code violations. Coca agreed to pay a fire official for the West New York Bureau of Fire Prevention, a witness who was voluntarily cooperating with federal authorities, a $2,000 cash bribe to eliminate the outstanding fire code fines and penalties. On March 27, 2014, Coca handed the fire official a $2,000 cash bribe.

The second building, located on Hudson Avenue and partly-owned by Coca, had more than $8.7 million in fines and penalties for outstanding fire code violations. Coca paid a $5,000 cash bribe to the fire official in return for the fire official purportedly reducing the amount due to the West New York Bureau of Fire Prevention to the initial fine amount of $5,000.

The two bribery counts to which Coca pleaded guilty each carry a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing is scheduled for Oct. 20, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Defense counsel:

Howard Brownstein Esq., Union City, New Jersey
Nelson Gonzalez Esq., Dover, New Jersey

CAMDEN, N.J. – A sports medicine doctor with a practice in Toms River, New Jersey, today admitted accepting more than $60,000 in cash bribes in return for referring pain cream prescriptions and falsifying health records on behalf of Prescriptions R Us (PRU), a compound pharmacy in Lakewood, New Jersey, U.S. Attorney Paul J. Fishman announced.

James Morales, 45, of Toms River, pleaded guilty before U.S. District Judge Joseph H. Rodriguez in Camden federal court to an information charging him with conspiracy to accept kickbacks and commit health care fraud.

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

Prescriptions R Us (PRU) was owned and operated by Vladimir Kleyman, 44, of Lakewood, New Jersey. As a compounding pharmacy, PRU prepared medication using different types and dosages of drugs in order to provide more personalized medications for patients. PRU supplied a topical cream for pain treatment that was made from ketamine (a Schedule III non-narcotic), lidocaine, diclofenac and other ingredients.

Morales operated Shore Sports Medicine, a medical practice in Toms River. Morales admitted that from February 2013 through December 2013, he accepted at least $60,000 in cash bribes from PRU in exchange for referring pain cream prescriptions.

Morales also admitted that on Dec. 19, 2013, Kleyman told Morales that the quantity of pain cream that Morales had prescribed was too high to get reimbursed by Horizon, a private health insurance plan. Kleyman asked Morales to start omitting quantity information on his prescriptions for the compounded pain cream. Morales admitted that he agreed to omit quantity information on prescriptions for patients enrolled in Horizon in order to help PRU obtain reimbursements.

The conspiracy charge to which Morales pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Oct. 5, 2015.

Kleyman previously pleaded guilty to conspiring to pay kickbacks in exchange for prescription referrals and committing health care fraud. His sentencing is scheduled for July 7, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jane H. Yoon and Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes. 

Defense counsel: A. Ross Pearlson Esq., Matthew E. Beck Esq., William Finizio Esq., West Orange, New Jersey

NEWARK, N.J. – A Philadelphia man today admitted trying to deliver 1.7 kilograms of pure methamphetamine in Elizabeth, New Jersey, U.S. Attorney Paul J. Fishman announced.

Aaron Vega-Castelo, 28, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to an indictment charging him with one count of distribution and possession with intent to distribute 50 grams or more of methamphetamine.

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

On Dec. 11, 2013, Vega-Castelo was stopped while driving a blue Jeep on the New Jersey Turnpike in Elizabeth. Law enforcement found four plastic food storage-style containers of methamphetamine hydrochloride and two shoeboxes containing approximately $110,000 in cash in the back seat area of his vehicle. Vega-Castelo admitted that at the time he was stopped by law enforcement, he was on his way to deliver the drugs and cash to other individuals near an Ikea in Elizabeth.

DEA testing of the seized methamphetamine revealed that it had a net weight of 1.79 kilograms and substance purity of 95.1 percent, which results in 1.7 kilograms of pure methamphetamine hydrochloride.

The charged offense carries a minimum penalty of ten years in prison, a maximum potential penalty of life in prison and a $10 million fine. Sentencing is scheduled for Oct. 15, 2015.

U.S. Attorney Fishman credited special agents of the Drug Enforcement Administration, Newark Division, under the direction of Special Agent in Charge Carl J. Kotowski, with the investigation.

The government is represented by Assistant U.S. Attorney Sara F. Merin of the Narcotics and Organized Crime Drug Enforcement Task Force Unit in Newark.

Defense counsel: Eric M. Mark Esq., Newark, New Jersey

NEWARK, N.J. – A New York attorney was convicted of mail fraud today for his role in an alleged scheme to defraud two international companies out of hundreds of thousands of dollars by fraudulently billing them for services that were never provided, U.S. Attorney Paul J. Fishman announced.   

Marijan Cvjeticanin, 50, of St. James, N.Y., was convicted of nine counts of mail fraud following a one-week trial before U.S. District Judge Michael Shipp in Trenton federal court. The jury deliberated two hours before returning the guilty verdicts.

According to the documents filed in this case and the evidence at trial:

From September 1996 to September 2012, Cvjeticanin worked for Wildes & Weinberg P.C., a New York law firm specializing in immigration law, first as a paralegal and then as an attorney. Among other clients, the firm represented Automatic Data Processing Inc. (ADP) and Broadridge Financial Solutions Inc. (Broadridge) in connection with various immigration law matters. Cvjeticanin was the case manager handling day-to-day tasks, such as preparing Department of Labor certifications and applications for permanent residency for certain foreign workers of those companies employed in the United States on a temporary basis.

The application process required ADP and Broadridge to place job advertisements in the geographic location where the relevant position was located, to demonstrate that there were no minimally qualified United States citizens available to fill that position. Wildes & Weinberg arranged for an independent advertising agency to contract with ADP and Broadridge to place the advertisements. At some point prior to 2010, Cvjeticanin caused ADP and Broadridge to replace the independent advertising agency with Flowerson Holdings Inc., a/k/a Flowerson Advertising (Flowerson). Unbeknownst to Wildes & Weinberg, ADP, or Broadridge, Cvjeticanin was the owner and principal of Flowerson. From that point until September 2012, Flowerson purportedly handled all of the certification advertisement obligations for ADP and Broadridge. In reality, Cvjeticanin did not place the majority of the advertisements as required and instead pocketed the monies paid to him by ADP and Broadridge.

In September 2012, Wildes & Weinberg learned through a routine audit of employee email accounts that Cvjeticanin owned and controlled Flowerson and fired him. The subsequent investigation revealed that between 2010 and September 2012, ADP and Broadridge collectively paid Flowerson approximately $579,000 for advertisements relating to permanent residency applications. Virtually all of the invoices that Flowerson submitted to ADP and Broadridge included charges for advertisements purportedly placed in Computer World magazine as well as advertisements placed in newspapers such as The New York Times, The Boston Globe, The Star-Ledger, The Seattle Times, and others. However, Cvjeticanin never placed the majority of advertisements. Instead, he kept the money for his personal benefit.

The investigation also revealed that from time to time the government would conduct audits of labor certifications submitted on behalf of ADP and Broadridge and request additional information from the filer, including copies of the print advertisements that had been placed. Cvjeticanin was responsible for gathering the print advertisements responsive to the government audit requests. Because Cvjeticanin had not placed most of the print advertisements, he was unable to provide the copies. Cvjeticanin took out advertisements after he received notice of the audit. Cvjeticanin then fraudulently superimposed those advertisements on a newspaper from another date and made a photocopy, which he submitted to the government. The photocopied submissions purported to show that the relevant advertisements had been placed on the appropriate dates.

Cvjeticanin faces a maximum potential penalty of 20 years in prison and a $250,000 fine on each of the counts on which he was convicted. The government is seeking the forfeiture of all funds fraudulently obtained by Cvjeticanin as a result of the scheme. Sentencing is scheduled for Aug. 25, 2015.

U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Kevin Kelly, Newark Field Office, and the U.S. Department of State Diplomatic Security Service, New York Field Office, under the direction of Special Agent in Charge David Schnorbus, with the investigation leading to today’s verdict.

The government is represented by Assistant U.S. Attorneys Francisco J. Navarro and Dennis C. Carletta of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel:  Lorraine Gauli-Rufo Esq., Verona, New Jersey; Thomas Ambrosio Esq., Lyndhurst, New Jersey

NEWARK, N.J. – A Hudson County, New Jersey, man was arrested at his home this morning for allegedly conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, U.S. Attorney Paul J. Fishman of the District of New Jersey, Assistant Attorney General for National Security John P. Carlin, and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division announced.

Alaa Saadeh, 23, of West New York, New Jersey, is charged by complaint with conspiring with other individuals in New Jersey and New York to provide services and personnel to ISIL, aiding and abetting an attempt to provide services and personnel to ISIL, and attempting to persuade a witness to lie to the FBI. He is scheduled to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

According to documents filed in this case:

The FBI and the Joint Terrorism Task Force (JTTF) have been investigating a group of individuals from New York and New Jersey who have allegedly conspired to provide material support to ISIL. Conspirator 1 (CC-1) lived in Rutherford, New Jersey, until leaving the country on May 5, 2015, allegedly to join ISIL. Conspirator 2 (CC-2) was a Queens, New York, resident until he was arrested in New York on June 13, 2015, on terrorism charges. Samuel Rahamin Topaz was a Fort Lee, New Jersey, resident until he was arrested in New Jersey on June 17, 2015, and charged with conspiring to provide services and personnel to ISIL.

When CC-1 attempted to travel to the Middle East via John F. Kennedy International Airport (JFK), allegedly in order to join ISIL, he was accompanied by Saadeh and CC-2.  On the way to the airport, CC-1 allegedly stated that he, Saadeh, CC-2, and Topaz had plans to reunite overseas within a few weeks.

After CC-1’s departure, and despite learning from CC-1’s family that he had been arrested in Jordan on suspicion of supporting ISIL, Saadeh, CC-2, and Topaz allegedly continued to discuss their plan to travel overseas to join ISIL. Electronic communications later recovered from Topaz’s phone corroborated their plans. On May 21, 2015, Saadeh and Topaz discussed the need to “lay low” and refrain from taking action in furtherance of the conspiracy to provide material support to ISIL that might be detected by law enforcement. Saadeh and Topaz also allegedly discussed needing to meet in person to discuss “hijra,” which Topaz later told members of the JTTF that referred to traveling overseas to join ISIL. The next day, Saadeh allegedly told another individual that he suspected that CC-2 or Topaz had “snitched” on CC-1 and caused his arrest overseas, and, if that was true, Saadeh thought he would have to “kill someone.” 

In recorded conversations with an informant, Saadeh revealed his support for ISIL, including its use of beheadings and mass killings to impose its violent agenda.  He said he planned to travel overseas with CC-2 “at some point.”  Saadeh allegedly said he knew CC-1 planned to travel to join ISIL before CC-1 departed the United States and that he bought CC-1’s airline ticket despite knowing this. The investigation also revealed that Saadeh provided CC-1 transportation and removed a SIM card from CC-1’s phone in an apparent effort to hide incriminating communications and other data.

In June, after becoming aware that he was under FBI surveillance, Saadeh allegedly directed an individual in New Jersey not to tell the FBI about CC-1’s support for ISIL or CC-1’s plans to travel to Syria and Iraq to join ISIL. Saadeh instructed the individual to “play dumb” and be “honest up to a point,” but to be sure not to tell the FBI anything about ISIL.

Each count in the complaint carries a maximum of potential penalty of 20 years in prison and a fine of $250,000.

U.S. Attorney Fishman credited the FBI and the JTTF, under the direction of Special Agent in Charge Frankel, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta, and Francisco J. Navarro of the U.S. Attorney’s Office National Security Unit in Newark, with the assistance of Trial Attorney Robert J. Sander of the National Security Division’s Counterterrorism Section.

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

 

Corporation Previously Paid More Than $80 million to Resolve Criminal and Civil Investigations

NEWARK, N.J. – The former president and CEO of OtisMed Corp. was sentenced today to serve 24 months in prison for intentionally distributing a medical device used in knee replacement surgery after its application for marketing clearance had been rejected by the Food and Drug Administration (FDA), the Justice Department announced.

Charlie Chi, 46, of San Francisco, pleaded guilty before U.S. District Judge Claire C. Cecchi in December 2014 to three counts of distributing adulterated medical devices in interstate commerce in violation of the federal Food, Drug, and Cosmetic Act (FDCA) after having been told by the FDA, legal counsel and his own board of directors not to do so. Judge Cecchi imposed the sentence today in Newark federal court. In September 2014, Judge Cecchi sentenced OtisMed Corporation, now a subsidiary of Stryker Corporation, to a criminal fine of $34.4 million and ordered the company to pay $5.16 million in criminal forfeiture. Stryker acquired the company after the criminal conduct for which Chi was sentenced. In a related civil settlement, OtisMed agreed to pay approximately $41.2 million, including interest, to resolve its civil liability for submitting false claims to the Medicare, TRICARE, Federal Employees Health Benefits and Medicaid programs.

“The defendant betrayed the trust of patients whose doctors were using his unapproved surgical device for a serious medical procedure,” U.S. Attorney Fishman said. “With everything else people have to deal with when they are facing surgery, they shouldn’t have to worry whether their doctor is using equipment that has been approved for use. The punishment meted out to Chi and his company is appropriate.”

“Today’s sentencing of OtisMed’s CEO ought to send a clear message to others in positions of authority within the medical device and pharmaceutical industries: the Department of Justice will vigorously prosecute not only corporations, but also the individuals at their helm who are responsible for endangering public health and safety in pursuit of profit,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said.

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

In August 2005, Chi was among the founders of OtisMed, and conceived of the OtisKnee orthopedic cutting guide, its primary product.  Chi acted as OtisMed’s president, CEO and chairman of its board of directors until OtisMed was acquired by Stryker in November 2009.  The OtisKnee was used by surgeons during total knee arthroplasty (TKA), commonly known as knee replacement surgery.  The surgical procedure requires a surgeon to remove the ends of the leg bones and to reshape the remaining bone to accommodate the implantation of an artificial knee prosthesis.  The cuts to the bone must be made at precise angles because they are critical to the clinical result; failure to achieve the correct angle in TKA procedures can result in failure of the bones and/or the implanted prosthetic joint.

OtisMed marketed the OtisKnee cutting guide as a tool to assist surgeons in making bone cuts specific to individual patients’ anatomy based on MRIs performed prior to surgery.  None of OtisMed’s claims regarding the OtisKnee device were evaluated by the FDA before the company used them in advertisements and promotional material.

Between May 2006 and September 2009, OtisMed sold more than 18,000 OtisKnee devices, generating revenue of approximately $27.1 million.

On Oct. 2, 2008, OtisMed submitted a pre-market notification to the FDA seeking clearance to market the OtisKnee.  The company had not previously sought the FDA’s clearance or approval and had been falsely representing to physicians and other potential purchasers that the product was exempt from such pre-market requirements.

On Sept. 2, 2009, the FDA sent OtisMed a notice that its submission had been denied, noting that the company had failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed devices.  The letter warned OtisMed that distribution of the OtisKnee prior to approval would be an FDCA violation, and indicated the FDA viewed the product as a “significant risk device system,” which is defined as presenting a potential for serious risk to the health, safety or welfare of a subject.  Chi and others at OtisMed received advice from legal and regulatory counsel confirming it would be unlawful for OtisMed to continue distributing the OtisKnee.

Though the board of directors unanimously decided to stop further shipments of the devices, Chi was concerned that inconveniencing surgeons planning to use the OtisKnee in scheduled surgeries would exacerbate the negative impact of the FDA letter on the reputation of OtisMed and the device.  Chi directed OtisMed employees to organize a mass shipment of all OtisKnee devices that had been manufactured but had not yet been shipped and suggested ways for the employees to hide the shipments from FDA regulators.

At Chi’s direction, OtisMed shipped approximately 218 OtisKnee guides from California to surgeons throughout the United States, including 16 to surgeons in New Jersey, a week after the FDA expressly denied OtisMed’s request for clearance.

“With more than 600,000 knee replacements performed each year, patients rely on FDA to help ensure that the devices are safe and work as intended,” Director George M. Karavetsos of the FDA’s Office of Criminal Investigations said.  “When manufacturers ignore FDA requirements, they risk endangering patients’ health and quality of life.  We will continue to protect the public health by bringing to justice those who disregard FDA regulations.”

Chi’s sentence marks the culmination of a long-term investigation conducted jointly by the FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Antoinette V. Henry, and the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), under the direction of Special Agent in Charge Scott J. Lampert. Counsel to the HHS-OIG and FDA’s Office of Chief Counsel to the FDA also assisted. The National Association of Medicaid Fraud Control Units, along with the Medicaid Fraud Control Unit of the Massachusetts Attorney General’s Office, assisted in coordinating the settlements with the various states.

In addition to the prison term, Judge Cecchi sentenced Chi to one year of supervised release and fined him $75,000.

The government is represented by Chief Jacob T. Elberg of the U.S. Attorney’s Office of the District of New Jersey Health Care and Government Fraud Unit and Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch.

U.S. Attorney Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Charlie Chi: Peter Harvey Esq., New York

OtisMed: Brien O’Connor Esq.; Joshua Levy Esq., Boston

Counsel for Relator Richard Adrian:  Joseph Callow Esq., Cincinnati, Ohio; Joel Hesch Esq., Lynchburg, Virginia

CAMDEN, N.J. – An Atlantic County, New Jersey, man was sentenced today to 324 months in prison for his role in a $3 million conspiracy to scam customers by offering phony consulting services to owners of timeshares through the New Jersey-based Vacation Ownership Group LLC, U.S. Attorney Paul J. Fishman announced.

Adam Lacerda, 31, of Egg Harbor Township, New Jersey, was convicted in September 2013 of one count of conspiracy to commit mail and wire fraud, nine counts of mail fraud and three counts of wire fraud flowing a seven-week trial before U.S. District Judge Noel L. Hillman in Camden federal court.

According to documents filed in this case and the evidence presented at trial:

Lacerda and his codefendants schemed to defraud hundreds of timeshare owners by offering fraudulent consulting services through their company, the Vacation Ownership Group (now VO Financial).  Lacerda, the company founder, president and chief executive officer, devised the company’s fraudulent sales pitches. He directed his sales force to tell numerous lies to VO customers, including that VO worked with the banks holding the customers’ loans, would use money sent by customers to pay off the customers’ loans on their timeshares, and could cancel customers’ timeshares with money back.

Three codefendants were convicted with Lacerda at the same trial: his wife, Ashley Lacerda, 35, the company vice president and chief operating officer, sent fraudulent contracts to customers and managed the office. Ian Resnick, 40, of Absecon, New Jersey, a convicted bank robber, started as a salesman giving the fraudulent sales pitch but became Adam Lacerda’s enforcer, with the title “director of compliance.” Genevieve Manzoni, 49, of Lake Worth, Fla. was a top VO sales representative who falsely told one victim she worked with a bank, another victim that she worked with a timeshare developer. They are all awaiting sentencing.

The 14 victims who testified at trial – including business executives, veterans, senior citizens, a lawyer and a professor – were defrauded out of a total of tens of thousands of dollars by the defendants’ sophisticated scheme.

In addition to the prison term, Judge Hillman sentenced Adam Lacerda to three years of supervised release.

U.S. Attorney Fishman credited special agents of FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent Cheryl Garcia, New York Region, for the investigation. He also thanked the N.J. Department of Labor and Workforce Development for its assistance.

The government is represented by Assistant U.S. Attorney R. David Walk Jr. of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel:

Adam Lacerda: Mark E. Cedrone Esq., Philadelphia

Ashley Lacerda: Charles Nugent Esq., Marlton, New Jersey

Ian Resnick: Michael E. Reilly Esq., Philadelphia

Genevieve Manzoni: Ralph A. Jacobs Esq., Philadelphia

TRENTON, N.J. – Two New York men were sentenced to prison today for participating in armed robberies of electronics stores in New Jersey, including armed robberies in Linden, Paramus, and Woodbridge, U.S. Attorney Paul J. Fishman announced.

Eric Williams, 34, and Sulayman Graham, 32, both of Brooklyn, New York, were sentenced to 151 and 63 months in prison, respectively. Williams and Graham previously pleaded guilty before U.S. District Judge Joel A. Pisano to separate informations charging them with one count of conspiracy to commit Hobbs Act robberies. U.S. District Judge Anne E. Thompson imposed both sentences today in Trenton federal court.

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

On Sept. 20, 2012, Carl Williams, 31, of Brooklyn, and Leonard Arrington, 28, of Roslyn Heights, New York, walked into a T-Mobile store in Linden brandishing a firearm, while Eric Williams and other conspirators – including Kajaun Crawley, 28, and Terrell McQueen, 31, both of Brooklyn – served as lookouts and get-away drivers. Carl Williams and Arrington then tied up the employees in the back of the store, stole 50 to 60 cell phones and fled in a Land Rover. Eric Williams and other conspirators then delivered the stolen phones to a cell phone store in Brooklyn.

On Oct. 2, 2012, Arrington entered a T-Mobile store in Woodbridge, brandishing a firearm, along with another man, while Graham and McQueen waited outside as lookouts and get-away drivers. After locking the front door, the men took the employees to the back of the store and tied them up, then stole approximately 40 cell phones. One of the robbers then called Graham, who drove them away in a Land Rover. Eric Williams and others delivered the stolen phones to the same Brooklyn store.

Eric Williams participated in the planning of a subsequent robbery of an electronics store in Paramus, which took place on Jan. 16, 2013. Unique Randolph, 28, of Brooklyn, and another individual entered an electronics store and, after forcing employees and a customer into the back of the store, Randolph tied them up using zip-ties, while his conspirator held them at gunpoint. As Randolph and his conspirator were looting the store of cell phones, a UPS employee walked into the backroom. Randolph forced him onto the ground and used zip-ties to restrain him. Randolph and his conspirator then fled, along with Carl Williams who was waiting outside as a lookout.

In addition to the prison terms, Judge Thompson sentenced Williams and Graham to each serve three years of supervised release.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s sentencing. He also thanked the Linden, Paramus, and Woodbridge police departments, as well as the New York City and Nassau County police departments and the Kings County District Attorney’s Office in New York for their work in this case.

The government is represented by Assistant U.S. Attorney Osmar J. Benvenuto of the U.S. Attorney’s Office Criminal Division.

Defense counsel:

Eric Williams: Michael A. Armstrong Esq., Willingboro, New Jersey
Sulayman Graham: Alyssa A. Cimino Esq., Fairfield, New Jersey

NEWARK, N.J.  – Three Somerset County, New Jersey, men were charged today with the armed bank robbery of the Somerset Savings Bank in Somerville, New Jersey, U.S. Attorney Paul J. Fishman announced.

Luis Castaneda, 38, of Bound Brook, New Jersey; Carmelo Soto Jr., 24, of Manville, New Jersey; and Jamie Lee Ayuso Jr., 38, of Hillsborough, New Jersey, were each charged by complaint with one count of bank robbery. Castaneda and Soto were also charged with one count each of using a firearm during the commission of crime of violence. All three men are scheduled to make their initial appearances this afternoon before U.S. Magistrate Judge James B. Clark III in Newark federal court.

According to documents filed in this case and statements court:

On June 12, 2015, Castaneda and Soto entered the Somerset Savings Bank while Ayuso stayed behind in the getaway vehicle. Castaneda drew a handgun while Soto jumped over the teller counter and demanded money from the bank tellers. After leaving the bank with the stolen money, Castaneda and Soto got in the getaway vehicle. Law enforcement officers immediately pulled over the getaway vehicle and arrested all three men.

The bank robbery count carries a maximum potential penalty of up to 20 years in prison and a fine of up to $250,000. The brandishing a firearm during the bank robbery count carries a mandatory minimum sentence of seven years in prison and a maximum sentence of life in prison, which must be served consecutive to the other count.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Somerset County Prosecutor’s Office, under the direction of Geoffrey D. Soriano; the Middlesex County Prosecutor’s Office, under the direction of Prosecutor Andrew C. Carey; and the Hunterdon County Prosecutor’s Office, under the direction of Prosecutor Anthony P. Kearns III, with the investigation leading to the charges. He also thanked the Somerville, Manville, Middlesex Boro, Piscataway, Readington, Bridgewater, Clinton Township and Bound Brook police departments for their work on the case.

The government is represented by Assistant U.S. Attorney Josh Hafetz of the U.S. Attorney’s Office in Newark.

 

NEWARK, N.J. – A Somerset County, New Jersey, man is expected to appear in court today on charges of fraud for allegedly soliciting $1.5 million from 16 investors based upon false and fraudulent financial records, U.S. Attorney Paul J. Fishman announced.

Rostyslaw Mykytyn, 56, of Skillman, New Jersey, was indicted by a federal grand jury on June 19, 2015, on five counts of wire fraud. His initial appearance and arraignment is scheduled for later today before U.S. Magistrate Judge James B. Clark III.

According to the indictment:

Mykytyn was the owner, president and CEO of RGM Management Co., d/b/a/ Campbell Co. Inc. Campbell was located in Washington State and provided sales representative services to a company that manufactured and distributed power and cooling infrastructures for large computer spaces. Mykytyn solicited various investors for Campbell based upon false and fraudulent financial statements.

Mykytyn allegedly created false commission statements from a client that showed sales in excess of $4 million, of which Campbell was due $472,720, to make Campbell’s income appear greater than it was. Mykytyn also falsely represented Campbell’s assets to investors who, relying on those representations, wire transferred $1.5 million into the company. Mykytyn would then divert a portion of the investment to himself to pay for his personal expenses, without disclosing the diversion to his investors.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a fine of up to the greater of $250,000 or twice the gain or twice the loss from the offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to these charges.

The government is represented by Special Assistant U.S. Attorney Jillian J. Reyes of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

NEWARK, N.J. – A doctor with a practice in Hawthorne, New Jersey, was sentenced today to 37 months in prison for accepting bribes in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Douglas Bienstock, 48, of Wayne, New Jersey, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to an information charging him with one count of accepting bribes. Judge Chesler imposed the sentence today in Newark federal court.

Including Bienstock, 38 people – 26 of them doctors – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. The investigation has so far recovered more than $11 million to date through forfeiture.

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

Bienstock admitted that from February 2008 through October 2009, he was paid more than $2,500 per month under a sham service contract in return for patient blood specimen referrals to BLS. BLS also paid Bienstock $100 in cash for each of a certain type of blood test that he ordered. As a result of Bienstock’s referrals, BLS received approximately $640,000 in lab business.

In addition to the prison term, Judge Chesler ordered Bienstock to serve one year of supervised release, pay a $75,000 fine and forfeit $79, 695.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation.

The government is represented by Senior Litigation Counsel Andrew Leven; Assistant U.S. Attorney Joseph N. Minish; Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark; and Assistant U.S. Attorney Barbara Ward, Chief of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Defense counsel: Alan Zegas Esq., Chatham, New Jersey

Guns Originated from Straw and Gun Show Purchases and Straw Purchases in Ohio

CAMDEN, N.J. – A Burlington County, New Jersey, man today admitted selling to a Camden drug dealer and other criminals in the Camden area at least 200 firearms that he purchased with cash from other illicit firearms dealers, U.S. Attorney Paul J. Fishman announced.

Joshua Jackson, 35, a/k/a “Trent,” of Willingboro, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with one count each of dealing firearms without a license, conspiracy to deal in firearms without a federal firearms license, and possession of firearms by a convicted felon.

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

Jackson admitted that between December 2009 and September 2010, he sold or brokered the sale of at least 200 handguns that he purchased with cash from illegal gun distributors in Ohio and from straw purchases by associates of his from gun stores in Columbus, Ohio.

Jackson sold many of the weapons to Terrance Laboo, 33, of Oaklyn, New Jersey. Laboo previously pleaded guilty before Judge Kugler and admitted that at the time of the firearms purchases from Jackson he was a Camden drug dealer engaged in ongoing sales of PCP.  Jackson also sold guns to other criminals in the South Jersey area.

Laboo has acknowledged that at the time he purchased these firearms from Jackson, he was distributing PCP and cocaine from the corner of 4th and Chestnut Streets in Camden. Laboo also previously admitted he sold, directed or brokered the sale of many of the firearms he purchased to other drug dealers in southern New Jersey.

Jackson obtained most of the firearms through purchases at gun shows from unlicensed gun sellers who were not subject to background checks. Some of the firearms also were purchased at Ohio gun stores by straw purchasers working for Jackson, who then transported the handguns to New Jersey from Ohio and resold them to Laboo and others in the Camden area. Laboo previously admitted he knew he was buying guns that came illegally from Ohio and Virginia.

Jackson transported the illegal firearms purchased in the Columbus, Ohio, area back to Camden and the surrounding area using a rental car and by using an associate to transport them in duffel bags on Greyhound buses running between Columbus and the Greyhound bus terminals in Philadelphia and Mount Laurel, New Jersey.

The illegal firearms dealing count and the conspiracy count to which Jackson pleaded guilty each carry a maximum potential penalty of five years in prison and a $250,000 fine. The possession of firearms by a convicted felon count carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for Oct. 2, 2015.

U.S. Attorney Fishman credited special agents of the ATF, under the direction of Special Agent in Charge George P. Belsky, with the investigation leading to today’s guilty plea. Mr. Fishman also thanked the U.S. Attorney’s Office in the Southern District of Ohio, directed by U.S. Attorney Carter M. Stewart, and agents of the ATF Field Division in Columbus, Ohio, under the direction of Special Agent in Charge Donald Soranno.

The government is represented by Assistant U.S. Attorney Patrick C. Askin of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Justin Loughry Esq., Philadelphia

CAMDEN, N.J. – A Woolwich Township, New Jersey, man today admitted scamming distressed homeowners into giving him their houses and then soliciting fake real estate investments from private investors – secured by those same properties – that netted him more than $3 million in illicit profits, U.S. Attorney Paul J. Fishman announced.

Randy Poulson, 44, pleaded guilty before U.S. District Judge Renée Marie Bumb in Camden federal court to Count One of an indictment charging him with mail fraud.

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

Poulson owned and operated Equity Capital Investments, LLC and Poulson Russo LLC and was the former president of the South Jersey Real Estate Investors Association. Paulson gave speeches, seminars, monthly dinners and various private tutorial sessions, purporting to teach real estate investing tips to individuals who paid fees to attend.

Poulson engaged in a two-pronged scheme. First, he promised to pay the mortgages of distressed homeowners facing foreclosure if they sold their homes to him. Using this method, Poulson obtained the deeds to more than 25 distressed homeowners’ residences, causing them to vacate the homes so renters could move in. Afterwards, Poulson then stopped making the monthly mortgage payments, causing those mortgages to go into foreclosure without the distressed homeowners’ knowledge.

  In the second part of the scheme, Poulson solicited seminar attendees and other private investors to invest in Equity Capital Investments, which purportedly bought and sold real estate. Poulson told the investors that their money would be used to acquire and rehabilitate a property, which Poulson claimed he would rent out and then sell for a 10 to 20 percent return on the investment.

The properties for which Poulson solicited the investments were those he acquired in the first part of the scheme. Although Poulson claimed that he would use funds to acquire and rehabilitate those properties, Poulson spent the money on personal expenses and to repay other investors. As a result of the scheme, Poulson was able to fraudulently obtain more than $3 million from investors.

The mail fraud count to which with Poulson pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing is scheduled for Oct. 2, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, in Newark, for the investigation leading to today’s plea.

The government is represented by Attorney in Charge R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Gilbert J. Scutti Esq., Somerdale, New Jersey

NEWARK, N.J. – A Linden, New Jersey, man was sentenced today to 240 months in prison for emailing multiple videos and pictures of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

John Ellenbacher, 49, previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with one count of distributing images of child pornography over the Internet. Judge Hayden imposed the sentence today in Newark federal court.

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

Ellenbacher admitted that between Aug. 15, 2012, and Aug. 21, 2012, he distributed 90 images and six videos depicting child sexual abuse to others via email. During his plea hearing, Ellenbacher also admitted to possessing more than 600 images and videos of child pornography on computer devices seized by federal law enforcement agents when they executed a search warrant at his home on March 20, 2013.

In addition to the prison term, Judge Hayden sentenced Ellenbacher to lifetime supervised release. As part of his guilty plea, Ellenbacher agreed to forfeit the computers and computer accessories he used to commit the offense. He will also be required to register as a sex offender.

U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge John P. Woods, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Danielle Alfonzo Walsman of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Candace Hom Esq., Assistant Federal Public Defender, Newark 

NEWARK, N.J. – A Newark man who committed three armed carjackings in a three-day period was sentenced today to 235 months in prison, U.S. Attorney Paul J. Fishman announced.

Jihad Brown, 29, previously pleaded guilty before U.S. District Judge Katherine S. Hayden to four counts of an indictment charging him with carjacking (Counts One, Three and Five) and using a firearm in furtherance of a crime of violence (Count Two). Judge Hayden imposed the sentence today in Newark federal court.

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

On May 5, 2011, Brown carjacked a family at gunpoint as they were picking up their three children at a relative’s home in Newark. During the carjacking, Brown walked up as the woman was securing her infant into the car-seat. Brown physically pressed the barrel of his gun against the woman’s head and shouted for everyone to get out of the car. Afterwards, Brown and his associates fled in the victims’ car.

The following day, on May 6, 2011, Brown carjacked a Newark resident at gunpoint as the man was backing out of his driveway. Brown fled in the victim’s car.

On the third day, May 7, 2011, Brown carjacked four individuals, including two nursing students and a two-year old girl. During the carjacking, Brown jumped onto the hood of the SUV and pointed a revolver at one of the victims through the open sunroof. Brown and his associates fled in the carjacked car.

Less than an hour later, Brown and an associate were in a different car when Newark police officers attempted to conduct a motor-vehicle stop. Brown and his associate fled. The ensuing police chase ended when Brown’s car ran a stop sign and collided with another car. Inside Brown’s car, officers found the revolver that Brown had used during the carjacking.

In addition to the prison term, Judge Hayden sentenced Brown to five years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; and the Newark Police Department, under the direction of Director Eugene Venable, with the investigation leading to today’s sentencing.

The government is represented Assistant U.S. Attorney Osmar J. Benvenuto of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel:  David Holman Esq., Newark

NEWARK, N.J. – A Bergen County, New Jersey, man was charged today with conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, U.S. Attorney Paul J. Fishman, Assistant Attorney General for National Security John P. Carlin, and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division announced.

Samuel Rahamin Topaz, 21, of Fort Lee, New Jersey, was arrested at his home on June 17, 2015, and is charged by complaint with one count of conspiring with others in New Jersey and New York to provide services and personnel to ISIL. He made his initial appearance this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court and was remanded without bail.

“Providing fighters and resources to a terrorist organization like ISIL is a threat to our country and its citizens,” U.S. Attorney Fishman said. “We will continue to use all the tools at our disposal to disrupt the efforts of those who are trying to do harm at home and abroad.”

“Samuel Topaz is alleged to have conspired with others to travel abroad to provide material support to ISIL,” Assistant Attorney General Carlin said.  “Counterterrorism is the National Security Division’s highest priority.  Stemming the flow of foreign fighters abroad and prosecuting those who attempt to provide material support to designated foreign terrorist organizations is key to our national security and public safety.”

"Material support of a terrorist organization is a violation of federal law,” FBI Newark Special Agent in Charge Richard M. Frankel said. “Topaz conspired to provide services and personnel to ISIL.  Topaz discussed his desire to travel to Syria to join ISIL. Fortunately, this threat did not materialize due to the indefatigable efforts of the FBI’s Joint Terrorism Task Force.  Prevention of terrorism is the FBI’s top priority and I ask the citizens of New Jersey to assist us in this task by remaining vigilant and contacting the FBI or the police if they see or hear anything suspicious.”

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

The FBI and the Joint Terrorism Task Force (JTTF) have been investigating a group of individuals from New York and New Jersey who have allegedly conspired to provide material support to ISIL. Conspirator 1 (CC-1) was a resident of Rutherford, New Jersey, until departing the United States on May 5, 2015, to allegedly join ISIL. Conspirator 2 (CC-2) was a resident of Queens, New York, until he was arrested June 13, 2015, in New York on terrorism charges. Conspirator 3 (CC-3) is a resident of New Jersey.

On May 1, 2015, Topaz discussed CC-1’s plan to travel overseas to join ISIL.  CC-1 sent Topaz a message stating that he would be leaving in a few days and asked, “[d]id you do what i [sic] advised you to do.”  Topaz responded, “I’m saving my money for it bro trust me I got it.”   On May 4, 2015, Topaz stated that he had his passport but needed cash to purchase his ticket.   CC-2 replied, “My trip is looking months away[.] if u can take a loan out for 5k or even 2.5k then ur [sic] good, they take US dollars in dawla so u can eat and buy stuff, and they provide u with housing when u reach the land of Islam.”  Topaz and CC-2 then discussed that they would be reuniting with CC-1 in Turkey before going to the dawla.  CC-2 stated that CC-1 would go first, and then they would join him soon thereafter.

On May 21, 2015, Topaz and CC-3 discussed that they needed to “lay low” and refrain from taking action in furtherance of the conspiracy to provide material support to ISIL that might be detected by law enforcement.  Topaz also told CC-3 that they need to discuss “hijra” in person.  Topaz later told members of the JTTF that he and his conspirators used the term “hijra” (often spelled “hijrah”) to refer to traveling overseas to join ISIL.

On June 13, 2015, CC-2 was arrested by the FBI and charged in a criminal complaint filed with the U.S. District Court of the Eastern District of New York with conspiring to provide material support to ISIL.  On June 15, 2015, Topaz wrote to an unidentified individual that CC-2 had not been answering his phone and added, “We gotta leave ASAP.”

The count of conspiracy to provide material support to a designated foreign terrorist organization carries a maximum potential penalty of 15 years in prison and a fine of $250,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and the JTTF, with the investigation leading to the arrest.

The government is represented by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta, and Francisco J. Navarro of the U.S. Attorney’s Office National Security Unit in Newark, with assistance from the Department of Justice’s National Security Division, Counterterrorism Section.

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

CAMDEN, N.J. – Norbulk Shipping UK LTD, a company based in Glasgow, United Kingdom, and operator of the vessel M/V Murcia Carrier, pleaded guilty today to failing to maintain an accurate oil record book and providing false statements to the U.S. Coast Guard concerning the vessel’s garbage record book, New Jersey U.S. Attorney Paul J. Fishman and the U.S. Department of Justice Environment and Natural Resources Division announced.

Immediately following the guilty plea in Camden federal court, the company was sentenced by U.S. District Judge Joseph H. Rodriguez to pay a criminal penalty of $750,000 and placed on probation for three years.

“Illegal discharges at sea damage our environment and endanger those who work in and enjoy our coastal waters,” U.S. Attorney Fishman said. “As we have shown before, shipping companies that engage in these criminal practices and deliberately discharge oil – and then lie about it to the Coast Guard – will be prosecuted.”

“Our oceans are life giving and life sustaining resources that our country and our world depend upon,” Assistant Attorney General John C. Cruden for the Environment and Natural Resources Division, said. “Ignoring perfectly legal and feasible ways to dispose of waste, the defendants chose instead to dump directly into the ocean.  Today the company will pay a price for this inexcusable and criminal act.”

“Marine environmental protection is one of the Coast Guard’s primary missions,” Capt. Benjamin Cooper, the Sector Commander at Coast Guard Sector Delaware Bay, said.  “The Coast Guard takes marine pollution seriously and works cohesively with our partner agencies to hold those who violate international law accountable for their actions. We anticipate the results of this case will deter future brazen illegal oil discharges into the sea.”

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

The Act to Prevent Pollution from Ships (APPS) requires vessels like the M/V Murcia Carrier to maintain an oil record book in which all transfers and disposals of oil-contaminated waste, including the discharge overboard of such waste, must be fully and accurately recorded.  Vessels like the M/V Murcia Carrier also must maintain a garbage record book that fully and accurately records the discharge of all garbage into the sea from the vessel.

On April 27, 2014, crew members of the M/V Murcia Carrier, at the direction of Chief Mate Valerii Georgiev, dumped overboard several barrels containing hydraulic oil. While Norbulk and Georgiev dispute the number of barrels dumped into the sea, the government believes it was approximately 20 barrels. The dumping occurred in international waters off the coast of Florida while the vessel was in transit from Costa Rica to New Jersey. It was not recorded in either the ship’s oil record book or garbage record book, as required. In an effort to conceal the dumping, crewmembers presented a U.S. Coast Guard boarding team with a false oil record book and garbage record book when the vessel arrived in Gloucester, New Jersey.

On June 15, 2015, Georgiev pleaded guilty to failing to maintain an accurate oil record book in violation of APPS.  He is scheduled to be sentenced July 8, 2015.

The case was investigated by U.S. Coast Guard Sector Delaware Bay and the U.S. Coast Guard Investigative Service.  The government is represented by Assistant U.S. Attorneys Kathleen P. O’Leary and Matthew Smith of the U.S. Attorney’s Office, District of New Jersey, and Joel La Bissonniere of the Environmental Crimes Section of the Department of Justice.

Defense counsel:

Georgiev: Michael Twersky Esq., Philadelphia

Norbulk: George Kontakis Esq., New York

Norbulk Shipping UK Ltd, a company based in Glasgow, United Kingdom, and operator of the M/V Murcia Carrier, pleaded guilty to failing to maintain an accurate oil record book in violation of the Act to Prevent Pollution from Ships (APPS) and providing false statements to the U.S. Coast Guard concerning the vessel’s garbage record book.  The company was sentenced to pay a criminal penalty of $750,000 and placed on three years of probation by the Honorable Joseph H. Rodriguez, the Department of Justice Environment and Natural Resources Division and the U.S Attorney’s Office for the District of New Jersey announced today.

“Our oceans are life giving and life sustaining resources that our country and our world depend upon,” said Assistant Attorney General John C. Cruden for the Environment and Natural Resources Division. “Ignoring perfectly legal and feasible ways to dispose of waste, the defendants chose instead to dump directly into the ocean.  Today the company will pay a price for this inexcusable and criminal act.”

“Illegal discharges at sea damage our environment and endanger those who work in and enjoy our coastal waters,” said U.S. Attorney Paul J. Fishman for the District of New Jersey.  “As we have shown before, shipping companies that engage in these criminal practices and deliberately discharge oil – and then lie about it to the Coast Guard – will be prosecuted.”

APPS requires vessels like the M/V Murcia Carrier to maintain a record known as an oil record book in which all transfers and disposals of oil-contaminated waste, including  the discharge overboard of such waste, must be fully and accurately recorded.  Additionally, vessels like the M/V Murcia Carrier must maintain a record known as garbage record book that fully and accurately records the discharge of all garbage into the sea from the vessel. 

On April 27, 2014, crew members on board the M/V Murcia Carrier dumped overboard several barrels containing hydraulic oil, at the direction of the vessel’s Chief Mate Valerii Georgiev.  While Norbulk and Georgiev dispute the number of barrels dumped into the sea, the government believes that approximately 20 barrels were dumped overboard.  The dumping occurred in international waters off the coast of Florida while the vessel was in transit from Costa Rica to New Jersey.  The dumping was not recorded in either the ship’s oil record book or garbage record book as required.  In an effort to conceal the dumping, crewmembers presented a U.S. Coast Guard boarding team with a false oil record book and garbage record book when the vessel arrived in Gloucester, New Jersey.

On June 15, 2015, Georgiev also pleaded guilty to failing to maintain an accurate oil record book in violation of APPS.  He is scheduled to be sentenced at a future date. 

“Marine environmental protection is one of the Coast Guard's primary missions,” said Captain Benjamin Cooper, the Sector Commander at Coast Guard Sector Delaware Bay.  “The Coast Guard takes marine pollution seriously and works cohesively with our partner agencies to hold those who violate international law accountable for their actions.  We anticipate the results of this case will deter future brazen illegal oil discharges into the sea.”

The case was investigated by U.S. Coast Guard Sector Delaware Bay and the U.S. Coast Guard Investigative Service.  The case was prosecuted by Joel La Bissonniere of the Environmental Crimes Section of the Department of Justice and Assistant U.S. Attorneys Kathleen P. O’Leary and Matthew Smith of the U.S. Attorney’s Office for the District of New Jersey.

NEWARK, N.J. – A Monmouth County, New Jersey, man was sentenced today to 37 months in prison for his role in a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Len Rubinstein, 44, of Holmdel, New Jersey, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to an information charging him with one count of conspiracy to commit bribery and one count of money laundering. Judge Chesler imposed the sentence today in Newark federal court.

Including Rubinstein, 38 people – 26 of them doctors – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. The investigation has so far recovered more than $11 million to date through forfeiture.

According to documents filed in this and other cases and statements made in court:

From May 2012 through April 2013, Rubinstein agreed with BLS president David Nicoll, 41, of Mountain Lakes, New Jersey, his brother, Scott Nicoll, 34, of Wayne, New Jersey, and others to pay doctors to refer patients to BLS for testing of blood specimens. Rubinstein paid cash bribes to doctors as part of the conspiracy. Rubinstein admitted he used Delta Consulting Group LLC – an entity he controlled – to hide the money he received from BLS and used to make bribe payments to doctors.

In addition to the prison term, Judge Chesler ordered Rubinstein to serve one year of supervised release, pay a $10,000 fine, and forfeit $250,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation.

The government is represented by Senior Litigation Counsel Andrew Leven; Assistant U.S. Attorney Joseph N. Minish; Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark; and Assistant U.S. Attorney Barbara Ward, Chief of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Defense counsel: Charles Uliano Esq., West Long Branch, New Jersey

CAMDEN, N.J. – A Passaic County, New Jersey, man was sentenced today to 60 months in prison for conspiring to launder money as part of a $15 million mortgage fraud scam that used phony documents and “straw buyers” to make illegal profits on overbuilt condos, U.S. Attorney Paul J. Fishman announced.

Nicholas Tarsia, Jr., 67, of Totowa, New Jersey, previously pleaded guilty before U.S. District Judge Jerome B. Simandle to a superseding information charging him with one count of conspiring to commit money laundering. Judge Simandle imposed the sentence today in Camden federal court.

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

Tarsia was among 13 defendants charged in a series of indictments returned on July 2012 and November 2013 with conspiracy to commit wire fraud and conspiracy to commit money laundering. Tarsia and his conspirator Timothy Ricks of Essex County, New Jersey, caused $15 million in fraudulent mortgage loans to be funded during 2006, 2007, and 2008, to enable unqualified buyers of real estate to purchase real estate properties. Once the funds for these mortgages were deposited into a title company’s escrow account, Tarsia extracted proceeds from the fraud through wire transfers and checks to himself and his conspirators. Tarsia and conspirator Ricks, in turn, transmitted a portion of those proceeds to other conspirators, including Dwayne Onque and Orlando Allen. In addition, conspirator Darryl Henry, in turn, transmitted a portion of those proceeds to conspirators Kinard J. Henson and Willie W. Richardson.

In addition to the prison term, Judge Simandle sentenced Tarsia to serve three years of supervised release. Restitution will be determined at a hearing scheduled for July 9, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, in Newark, for their roles in the investigation.

The government is represented by Assistant U.S. Attorneys Matthew T. Smith and Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Telesforo Del Valle Jr. Esq., New York

NEWARK, N.J. – A Monmouth County, New Jersey, man was sentenced today to 21 months in prison for his role in a racketeering conspiracy, U.S. Attorney Paul J. Fishman announced.

Michael O’Donnell, 51, Wall Township, previously pleaded guilty before U.S. District Judge Claire C. Cecchi, to an information charging him with conspiracy to violate the Racketeer Influenced and Corrupt Organizations, or RICO, statute by participating in the activities of Beteagle, an overseas Website that facilitated online sports betting. Judge Cecchi imposed the sentence today in Newark federal court.

According to documents filed in this and other cases and statements made in court:

Joseph Graziano, 78, of Springfield, was the principal owner of Beteagle.com, a website located in Costa Rica and used to facilitate illegal online sports betting. Dominick Barone, 45, of Springfield, New Jersey, worked with Graziano in carrying out the daily activities of the website.

O’Donnell was given access to Beteagle and was considered an “agent” of the website. Before the advent of computerized betting, these agents would have been referred to as “bookmakers” or “bookies.” The agents had the ability to track the “sub-agents,” under them and the wagers placed by their bettors. The agent or sub-agent maintained a group of bettors (the “package”) and were responsible for those bettors.

O’Donnell was an agent who assisted in the illegal gambling business conducted through the website. To place bets online, the agent or sub-agent issued the bettor a username and password to access Beteagle. This access was not given online and no money or credits were made or transferred through the website. O’Donnell and his conspirators paid out winnings or collected losses in person. The agent or sub-agent paid a fee to the website for each bettor added to a package. O’Donnell collected money from bettors and then passed a portion of the proceeds to Barone in furtherance of the racketeering scheme.

In addition to the prison term, Judge Cecchi ordered O’Donnell to serve three years of supervised release and pay a $5,000 fine.

Graziano has pleaded guilty to his role in the scheme and is currently scheduled for sentencing on June 25, 2015.  Barone was sentenced to 18 months’ imprisonment.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Bayonne Police Department, Special Investigations Unit, under the direction of Chief Drew Niekrasz; IRS-Criminal Investigation under the direction of Special Agent in Charge Jonathan D. Larsen; the N.J. State Police, under the direction of Superintendent Rick Fuentes; and the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Robert L. Galantucci Esq., Hackensack, New Jersey

TRENTON, N.J. – A Millstone, New Jersey, man was sentenced today to 12 months in prison for conspiring to extort victims out of money and property by falsely stating they were the subjects of IRS criminal investigations, U.S. Attorney Paul J. Fishman announced.

Robert G. Cusic Jr., 46, previously pleaded guilty before U.S. District Judge Joel A. Pisano to an information charging him with conspiracy to commit extortion under fear of economic harm. U.S. District Judge Anne E. Thompson imposed the sentence today in Trenton federal court.

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

Cusic, Thomas G. Frey, 55, of Edison, New Jersey, and another conspirator (identified only as CC-1), schemed to extort and to defraud four victims, including two police officers, by falsely representing to the victims that they were the subjects of criminal investigations, principally by the IRS, in connection with investment properties some of them owned. Cusic falsely represented that while at a property formerly owned by one of the victims, Cusic encountered two IRS special agents (SA-1 and SA-2) who questioned him extensively about some of the victims.

Frey, a lawyer and certified public accountant, falsely told the victims he had ongoing communications with SA-1 about the purported investigation and had a special relationship with SA-1. Frey told the victims if they paid up to $20,000 each, he would call SA-1 and have the investigation converted from a criminal tax investigation to an IRS “desk audit,” a civil matter. Frey and CC-1 falsely stated that if the victims did not retain his services and pay the fee, the investigation would likely result in the arrest of certain victims.

Cusic admitted the goal of the conspiracy was to obtain approximately $80,000 in fees for Frey and to cause the victims to sell certain of the properties to Frey and others. Cusic stood to receive a portion of any fees paid by the victims, a percentage of the sale price of each of the investment properties sold to Frey and others, and property management fees on any of the properties sold.

In addition to the prison term, Judge Thompson sentenced Cusic to serve three years of supervised release and ordered him to pay a $3,000 fine.

Frey previously pleaded guilty before Judge Pisano to two counts of an indictment charging him with conspiracy to commit extortion under fear of economic harm and conspiracy to commit wire fraud. He was sentenced on April 27, 2015, to 27 months in prison.

Fishman credited special agents of the Treasury Inspector General for Tax Administration, under the direction of Special Agent in Charge Rodney Davis, Washington Field Division, for the investigation leading to today’s sentencing. 

The government is represented by Assistant U.S. Attorney Eric W. Moran of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Defense Counsel: Peter R. Willis Esq., Jersey City, New Jersey

NEWARK, N.J. – Two members of a racketeering conspiracy involving the Genovese Crime Family of La Cosa Nostra and an online sports betting operation were sentenced today in federal court, U.S. Attorney Paul J. Fishman announced.

Dominick J. Barone, 45, of Springfield, New Jersey, and Eric Patten, 38, of Bayonne, New Jersey, were sentenced to 18 and 22 months in prison, respectively. Barone and Patten previously pleaded guilty before District Judge Claire C. Cecchi to separate informations charging them with one count of racketeering conspiracy. Judge Cecchi imposed both sentences today in Newark federal court.

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

Joseph Graziano, 78, of Springfield, was the principal owner of Beteagle.com, a website located in Costa Rica and used to facilitate illegal online sports betting. Barone worked with Graziano in carrying out the daily activities of the website and both men conspired with the Genovese Crime Family of La Cosa Nostra in the operation of Beteagle.

Joseph Lascala, 80, of Monroe, New Jersey, was the alleged “capo” and a made member of the Genovese family operating in northern New Jersey. He directed the criminal activities of a smaller group of associates, referred to as a crew, whose activities included illegal gambling and the collection of unlawful debt.

Associates of the crew were given access to Beteagle and were considered “agents.” Before the advent of computerized betting, these agents would have been referred to as “bookmakers” or “bookies.” The agents had the ability to track the “sub-agents,” under them and the wagers placed by their bettors. The agent or sub-agent maintained a group of bettors (the “package”) and were responsible for those bettors. Patten was a one of the sub-agents who assisted in the illegal gambling business conducted through the website.

To place bets online, the agent or sub-agent issued the bettor a username and password to access Beteagle. This access was not given online and no money or credits were made or transferred through the website. Associates of the crew paid out winnings or collected losses in person. If a bettor failed to pay his gambling losses, the crew used their La Cosa Nostra status and threats of violence to collect on these debts.

The agent or sub-agent paid a fee to the website for each bettor added to a package.  Barone and others made weekly collections of cash in furtherance of the scheme.

In addition to the prison terms, Judge Cecchi ordered Barone and Patten to each serve three years of supervised release and pay a $5,000 fine. As part of his plea agreement, Barone must forfeit $100,000.

Graziano has pleaded guilty to his role in the scheme and is currently scheduled for sentencing on June 25, 2015.

Charges against Lascala are still pending. The charges and allegations against him are merely accusations and he is presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Bayonne Police Department, Special Investigations Unit, under the direction of Chief Drew Niekrasz; IRS-Criminal Investigation under the direction of Special Agent in Charge Jonathan D. Larsen; the N.J. State Police, under the direction of Superintendent Rick Fuentes; and the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel:

Barone: John C. Whipple Esq. Morristown, New Jersey

Patten: Alan Dexter Bowman Esq., Newark

NEWARK, N.J. – A real estate developer and landlord of commercial buildings in Palisades Park, New Jersey, appeared in federal court today to face a criminal complaint charging him with allegedly soliciting a $50,000 bribe payment for a Palisades Park borough official, U.S. Attorney Paul J. Fishman announced.

Chung S. Kho, 68, of Fort Lee, New Jersey, is charged by complaint with one count of using facilities in interstate commerce to promote bribery. Kho appeared this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court and was released on $50,000 unsecured bond.

According to the complaint:

Beginning in October 2010, Kho met with an individual (“Individual #1”) who sought to open a karaoke business at a multi-unit commercial building owned by Kho. Kho guaranteed that there would be no problem in obtaining a necessary change of use permit from Palisades Park to operate a karaoke business at the location. Kho bragged about his close relationship with a Palisades Park borough official who had previously assisted him with the development of other large-scale commercial buildings in Palisades Park.

Individual #1 entered into a lease agreement with Kho in October 2010 for the commercial space to open the karaoke business. In December 2010, Kho allegedly told Individual #1 that the official would obtain the necessary approvals for the karaoke business if Individual #1 paid the official a $50,000 bribe. Over the next few days, Individual #1 attempted to negotiate a lower amount, but was eventually told by Kho that the official would accept nothing less than $50,000 in cash. By the time Individual #1 agreed to pay $50,000 to the official, Kho informed Individual #1 that it was too late to make the payment. On Dec. 15, 2010, Individual #1’s application for a change of use was denied by the Palisades Park Planning Board.

The charge of using facilities in interstate commerce to promote bribery with which Kho is charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Garret Mountain Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel; special agents of the U.S. Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Christina Scaringi; and special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation.

The government is represented by Assistant U.S. Attorney Jacques S. Pierre of the Special Prosecutions Division in Newark.

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

Defense counsel: Robert C. Scrivo, Esq., Morristown, New Jersey

TRENTON, N.J. – A Union County, New Jersey, tax preparer was today convicted of tax fraud for getting unearned tax refunds for his clients to make extra money for himself, U.S. Attorney Paul J. Fishman announced.

Courtney Johnson, 45, of Union Township, New Jersey, was convicted of six counts of aiding and assisting in the preparation of false federal income tax returns following a two week trial before U.S. District Judge Anne E. Thompson in Trenton federal court. The jury deliberated four hours before delivering the verdicts.

According to documents filed in this case and the evidence at trial:

Johnson prepared and filed federal individual income tax returns that were false and fraudulent as to material matters. The returns attached schedules for fictitious businesses that the taxpayers did not own or operate, inflated charitable contributions, fabricated itemized deductions – all to generate fraudulently inflated refunds.

His wife, Carol Johnson, 44, who ran the business with him, previously pleaded guilty to misprision of a felony and is awaiting sentencing. The Johnsons operated tax preparation businesses in South Orange and Jersey City, New Jersey.

Each false tax return count carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing for Courtney Johnson is scheduled for Sept. 25, 2015.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s guilty verdict.

The government is represented by Assistant U.S. Attorneys Jane H. Yoon and Jillian J. Reyes of the Criminal Division in Newark.

Defense counsel: Thomas R. Ashley Esq., Newark

WASHINGTON – The former co-chief executive officer (CEO) of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and formerly with an office in New Jersey – pleaded guilty today to conspiring to pay bribes to a foreign government official in violation of the Foreign Corrupt Practices Act (FCPA).

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey, and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division made the announcement.

Joseph Sigelman, 43, of Miami and the Philippines, pleaded guilty today in the District of New Jersey to Count One of a superseding indictment charging him with conspiracy to violate the FCPA. His trial had commenced on June 1, 2015. Sigelman will be sentenced June 16, 2015.

At his plea hearing, Sigelman admitted to conspiring with co-CEO Knut Hammarskjold, PetroTiger’s former general counsel Gregory Weisman, and others to make illegal payments of $333,500 to David Duran, an employee of the Colombian national oil company, Ecopetrol.  Sigelman admitted to making the payments in exchange for Duran’s assistance in securing a $45 million oil services contract for PetroTiger.

Sigelman is the third former PetroTiger executive to plead guilty in the case. On Nov. 8, 2013, Weisman pleaded guilty to conspiracy to violate the FCPA and to commit wire fraud. On Feb. 18, 2014, Hammarskjold pleaded guilty to conspiracy to violate the FCPA and to commit wire fraud.

The case was brought to the attention of the department through a voluntary disclosure by PetroTiger, which fully cooperated with the department’s investigation. Based on PetroTiger’s voluntary disclosure, cooperation, and remediation, among other factors, the department declined to prosecute PetroTiger.

The department has worked closely with, and has received significant assistance from, its law enforcement counterparts in the Republic of Colombia, which announced in March of this year the arrests of Duran, his wife, a former employee of PetroTiger, and several other officials from Ecopetrol.  Those charges are pending, and a defendant is presumed innocent unless and until proven guilty.

The department also received significant assistance from Ecopetrol, the National Hydrocarbons Agency, the Office of the Secretary of Transparency of the Republic of Colombia, the Office of the Attorney General of the Republic of Colombia and other agencies within the Colombian government.  The department also appreciates the assistance of the Republic of the Philippines, including the Bureau of Immigration and the Republic of Panama. The department would also like to thank the United Kingdom’s Metropolitan Police International Assistance Unit for their assistance.

The case is being investigated by the FBI’s Newark Division. The case is being prosecuted by Deputy Chief Patrick Stokes and Assistant Chief Tarek Helou, with support from Assistant Chief Daniel Kahn, of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Zach Intrater and Glenn Moramarco of the District of New Jersey. The Criminal Division’s Office of International Affairs also provided significant assistance.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Defense counsel: Matthew I. Menschel, William A. Burck, Juan Pablo Morillo Esqs., Washington; Patrick J. Egan Esq., Philadelphia

CAMDEN, N.J. - A Philadelphia man was sentenced today to 60 months in prison for robbing five banks in New Jersey and Pennsylvania over four months, U.S. Attorney Paul J. Fishman announced today.

Nathaniel Stroud, 34, previously pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court to an information charging him with two counts of bank robbery. Judge Irenas imposed the sentence today in Camden federal court.

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

Stroud admitted robbing the following banks:

Date

Bank

Location

Sept. 27, 2013

PNC Bank

2401 Welsh Road, Philadelphia

Nov. 8, 2013

Roma Bank

80 Hartford Road, Delran, New Jersey

Nov. 15, 2013

TD Bank

13 Levitt Parkway, Willingboro, New Jersey

Dec. 19, 2013

TD Bank

2231 Cottman Avenue, Philadelphia

Jan. 9, 2014

1st Constitution Bank

140 Mercer Street, Hightstown, New Jersey

Stroud admitted that at each robbery, he handed the teller a note demanding cash and threatening the use of a gun.

In addition to the prison term, Judge Irenas sentenced Stroud to serve three years of supervised release and ordered him to pay restitution of $21,640.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, in Newark; the Burlington County Prosecutor’s Office, under the direction of Prosecutor Robert D. Bernardi: and the Mercer County Prosecutor’s Office, under the direction of Acting Prosecutor Angelo J. Onofri, with the investigation. He also thanked the Delran, Willingboro and Hightstown police departments for their assistance.

The government is represented by Assistant U.S. Attorney Matthew J. Skahill of the U.S. Attorney's Office Special Prosecutions Division in Camden.

Defense counsel: Maggie Moy Esq., Assistant Federal Public Defender, Camden

TRENTON, N.J. – A Ft. Dix, New Jersey, man was arrested by the Naval Criminal Investigative Service at a U.S. Marine training facility in Pensacola, Florida, on charges that he allegedly sexually assaulted two young women at Joint Base McGuire-Dix-Lakehurst, New Jersey, U.S. Attorney Paul J. Fishman announced today.

Michael C. Taylor, 19, of Fort Dix, New Jersey, is charged by indictment with three counts of aggravated sexual abuse by force and two counts of abusive sexual contact. He had his initial court appearance this morning before U.S. Magistrate Judge Charles J. Kahn Jr. in Pensacola, Florida, federal court. He will have an initial appearance and arraignment in Trenton federal court at a date to be determined.

According to the indictment:

On March 15, 2014, Taylor caused two individuals to engage in sexual acts by the use of force, and also caused one of the individuals to engage in sexual contact by the use of force. At the time of the alleged offenses, Taylor, who is now a member of the U.S. Marine Corps, was living in military housing at Joint Base McGuire-Dix-Lakehurst as a military dependent.

The three counts of sexual assault each carry a maximum potential penalty of life in prison and a $250,000 fine. The two counts of abusive sexual contact each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the U.S. Air Force Office of Special Investigations, under the leadership of Detachment Commander Matthew J. Sarkissian, with the investigation leading to the indictment.

The government is represented by Assistant U.S. Attorney Molly Lorber of the U.S. attorney’s Office Criminal Division in Trenton.

The charges and allegations contained in the indictment are merely accusations and the defendant is considered innocent unless and until proven guilty.

CAMDEN, N.J. – A Franklinville, New Jersey, man today admitted mailing fraudulent invoices for non-existent workbooks to more than 73,000 schools throughout the United States, U.S. Attorney Paul J. Fishman announced.

Robert S. Armstrong, 44, pleaded guilty before U.S. District Judge Noel L. Hillman in Camden federal court to Count One of a superseding indictment charging him with mail fraud.

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

Armstrong admitted that from July 2014 through September 2014, he sent more than 73,000 fraudulent invoices to schools throughout the United States seeking payment for non-existent workbooks. Armstrong opened mail boxes in Sewell, New Jersey, and Las Vegas, Nevada, under the name of his business, Scholastic School Supply LLC. Armstrong then drafted fraudulent invoices typically seeking payments of $647.50 for batches of math or language workbooks that the schools never ordered or received. In order to make the invoices appear legitimate, Armstrong included phony International Standard Book Numbers (ISBN), which are unique identifying numbers assigned to each book published in the United States.

Armstrong used a bulk mailing company to mail the phony invoices to more than 73,000 schools. Each invoice included a payment envelope preaddressed to Scholastic School Supply’s Sewell or Las Vegas address.

In response to the phony invoices, hundreds of schools throughout the United States sent payments to Scholastic School Supply. Armstrong deposited the checks from the victim schools into at least seven accounts that he had opened at various banks in the name of Scholastic School Supply. As of March 12, 2015, 938 schools sent checks to Scholastic School Supplies totaling $612,774.

Under terms of the plea agreement, Armstrong has agreed to serve a sentence of 44 months in prison followed by three years of supervised release. According to the Federal Rules of Criminal Procedure, when the parties agree to a stipulated sentence, the judge has the opportunity to accept or reject the plea agreement. Judge Hillman said he will reserve his decision on accepting plea agreement until he reviews a pre-sentence report from the U.S. Probation Office, which typically takes 60 to 90 days to prepare. Contingent upon the acceptance of his guilty plea by Judge Hillman, Armstrong’s sentencing is scheduled for Sept. 25, 2015.

U.S. Attorney Fishman credited law enforcement officers of the U.S. Postal Inspection Service, under the direction of Inspector in Charge David Bosch in Philadelphia; the Gloucester County Prosecutor’s Office, under the direction of Prosecutor Sean F. Dalton; the Gloucester County Office of Consumer Protection, under the direction of Harold Spence, Director of Consumer Affairs; the Washington Township Police Department, under the direction of Raphael Muniz, Chief of Police; and the Franklin Township Police Department, under the direction of Mike Rock, Chief of Police.

The government is represented by Assistant U.S. Attorney Diana Carrig of the U.S. Attorney’s Office Criminal Division in Camden and Assistant U.S. Attorney Meredith Williams of the U.S. Attorney’s Office Criminal Division in Newark.

 

Played Key Role in Illegal International Procurement Network

NEWARK, N.J. – A Mountainside, New Jersey, man today admitted his role in an international procurement network that obtained and smuggled more than $65 million worth of electronics from the United States to Russia in violation of export control laws, U.S. Attorney Paul J. Fishman announced.

Alexander Brazhnikov Jr., 36, a naturalized United States citizen born in Moscow, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to an information charging him with one count of conspiracy to commit money laundering, one count of conspiracy to smuggle electronics from the United States, and one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA).

“As he admitted in court, Brazhnikov was responsible for nearly 2,000 illegal shipments of regulated, sensitive electronics components, many of which wound up in the hands of Russian military and security forces,” U.S. Attorney Fishman said. “He also admitted going to extraordinary lengths to conceal the nature and destination of the shipments, as well to hide the tens of millions of dollars in illegal proceeds generated by the scheme. Shutting down schemes like this keep all of us safer.”

 “Alexander Brazhnikov Jr. significantly undermined the national security of the U.S. by procuring sophisticated, high-tech electronic components and smuggling them into Russia, thereby enhancing the capabilities of the Russian Intelligence Service, and contributing to the modernization of  both the Russian Military Service and the Russian Nuclear Weapons Program,” Richard M. Frankel, FBI Special Agent in Charge, Newark, said. “Now, Brazhnikov must face the consequences of his actions and the full power of U.S.  jurisprudence.”

Brazhnikov Jr. was arrested at his home on June 26, 2014, following a joint investigation by the FBI, the U.S. Department of Commerce (DOC), and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). From January 2008 through June 2014, he was the owner, chief executive officer, and principal operator of four New Jersey microelectronics export companies, each of which were used in the various conspiracies uncovered by the investigation. Following his arrest, special agents seized $4,075,237 in proceeds related to the charged offenses, as well as real property and other assets valued at more than $600,000.

“Today's plea represents a collaborative effort among law enforcement agencies,” Sidney Simon, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office, said. “I commend our colleagues at the FBI and Homeland Security Investigations for their efforts. The Office of Export Enforcement will continue to pursue violators of our export control laws by leveraging our unique authorities to protect national security.”

“HSI will use all the resources at its disposal to prevent sensitive and restricted technology from being exported illegally,” Acting Special Agent in Charge Kevin Kelly, HIS, Newark, said. “HSI will do all in its power as the principal enforcer of export controls to ensure that sensitive technology doesn’t fall into the wrong hands.”

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

Brazhnikov Jr. and his companies are part of a sophisticated procurement network that has surreptitiously acquired large quantities of license-controlled electronic components from American manufacturers and vendors and exported those items to Russia on behalf of Russian business entities that were authorized to supply them to the Ministry of Defense of the Russian Federation, the Federal Security Service of the Russian Federation (the FSB), and Russian entities involved in the design of nuclear warheads, weapons, and tactical platforms.

The defendant conspired with his father, Alexander Brazhnikov Sr., owner of a Moscow-based procurement firm whose agents helped initiate the purchase of electronics components from United States vendors and manufacturers on behalf of the conspirators’ clients in Russia.  Brazhnikov Jr. finalized the purchase and acquisition of the requested components from the various distributors, then repackaged and shipped them to Moscow. He routinely falsified the true identity of the end-user of the components and the true value of the components in order to avoid filling out required export control forms. Brazhnikov Jr. purposefully concealed the true destination of the parts that were exported by directing that the shipments be sent to various “shell” addresses in Russia – some of which have been identified as vacant storefronts and apartments – which were established and controlled by the Moscow-based network. All shipments initially directed to the shell addresses were redirected to a central warehouse controlled by the conspirators’ Moscow-based network.

The funds for the network’s illicit transactions were obtained from the various Russian purchases and initially deposited into one of the conspirators’ primary Russia-based accounts.  Disbursements for purchases were made from that primary Russian account through one or more foreign accounts held by shell corporations  in the British Virgin Islands, Latvia, Marshall Islands, Panama, Ireland, England, United Arab Emirates, and Belize, and ultimately into one of the defendant’s U.S.-based accounts. The network’s creation and use of dozens of bank accounts and shell companies abroad was intended to conceal the true sources of funds in Russia, as well as the identities of the various Russian defense contracting firms receiving U.S. electronics components.

The money laundering conspiracy charge to which Brazhnikov Jr. pleaded guilty carries a maximum potential penalty of 20 years in prison and a $500,000 fine.  The smuggling and IEEPA conspiracy charges carry a maximum potential penalty, per count, of five years in prison and a $250,000 fine.  Sentencing is scheduled for Sept. 15, 2015. Brazhnikov Jr. also agreed to the entry of a forfeiture money judgment of $65 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Frankel in Newark; the U.S. Department of Commerce, under the direction of Special Agent in Charge Simon, New York Field Office; special agents of HSI, under the direction of Acting Special Agent in Charge Kelly. He also thanked officers from the Union County Police Department, under the direction of Captain Chris Debbie; and officers of the Mountainside Police Department, under the direction of Police Chief Allan Attanasio, for their important contributions to the investigation. The U.S. Justice Department’s Office of International Affairs provided assistance with this case.

The government is represented by Assistant U.S. Attorneys Dennis C. Carletta of the U.S. Attorney’s Office National Security Unit, and Peter Gaeta of the office’s Asset Forfeiture and Money Laundering Unit in Newark.

Defense counsel: Jack Arseneault Esq., Chatham, New Jersey

CAMDEN, N.J. – A Rochelle Park, New Jersey, man today admitted selling Occupational Safety and Health Administration (OSHA) certifications to New Jersey carpenters who never completed the required training, U.S. Attorney Paul J. Fishman announced.

George Bello, 44, pleaded guilty before U.S. District Judge Joseph H. Rodriguez in Camden federal court to an information charging him with making false statements in the creation and sale of construction industry certification forms, known as “OSHA 30” cards.

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

The OSHA 30 training program provides construction workers with foundational knowledge and skills in occupational safety. Frederick Prinz, 38, of Marmora, New Jersey, was certified by OSHA’s Outreach Training Program (OTP) at the Rocky Mountain Education Center, in Red Rocks, Colorado, to issue workers OSHA 30 cards after they passed a 30-hour OTP training course. For a fee of $150 to $250 per card, Bello, Prinz and others sold false OSHA 30 certifications to carpenters who never completed the required training. The fees were split between Bello, Prinze and others who promoted the fraudulent cards at various work sites.

The charge to which Bello pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Sept. 21, 2015. Prinz previously pleaded guilty to his role and was sentenced to two years of probation on Jan. 29, 2015.

U.S. Attorney Fishman credited special agents of the Department of Labor-Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia, with the investigation leading to today’s guilty plea. He also thanked OSHA for its assistance.

The government is represented by V. Grady O’Malley, Senior Litigation Counsel of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.

Defense counsel: Raymond F. Flood Esq., Hackensack, New Jersey

A Mountainside, New Jersey, man today admitted his role in an international procurement network that obtained and smuggled more than $65 million worth of electronics from the United States to Russia in violation of export control laws, U.S. Attorney Paul J. Fishman of the District of New Jersey announced.

Alexander Brazhnikov Jr., 36, a naturalized U.S. citizen born in Moscow, pleaded guilty before U.S. District Court Judge William J. Martini of the District of New Jersey, to an information charging him with one count of conspiracy to commit money laundering, one count of conspiracy to smuggle electronics from the United States and one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA).

“As he admitted in court, Brazhnikov was responsible for nearly 2,000 illegal shipments of regulated, sensitive electronics components, many of which wound up in the hands of Russian military and security forces,” said U.S. Attorney Fishman.  “He also admitted going to extraordinary lengths to conceal the nature and destination of the shipments, as well to hide the tens of millions of dollars in illegal proceeds generated by the scheme.  Shutting down schemes like this keep all of us safer.”

“Alexander Brazhnikov Jr. significantly undermined the national security of the U.S. by procuring sophisticated, high-tech electronic components and smuggling them into Russia, thereby enhancing the capabilities of the Russian Intelligence Service and contributing to the modernization of both the Russian Military Service and the Russian Nuclear Weapons Program,” said Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division.  “Now, Brazhnikov must face the consequences of his actions and the full power of U.S.  jurisprudence.”

Brazhnikov Jr. was arrested at his home on June 26, 2014, following a joint investigation by the FBI, the U.S. Department of Commerce (DOC) and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI).  From January 2008 through June 2014, he was the owner, chief executive officer and principal operator of four New Jersey microelectronics export companies, each of which were used in the various conspiracies uncovered by the investigation.  Following his arrest, special agents seized $4,075,237 in proceeds related to the charged offenses, as well as real property and other assets valued at more than $600,000.

“Today's plea represents a collaborative effort among law enforcement agencies,” said Special Agent in Charge Sidney Simon of the DOC, Bureau of Industry and Security, Office of Export Enforcement’s New York Field Office.  “I commend our colleagues at the FBI and Homeland Security Investigations for their efforts.  The Office of Export Enforcement will continue to pursue violators of our export control laws by leveraging our unique authorities to protect national security.”

“HSI will use all the resources at its disposal to prevent sensitive and restricted technology from being exported illegally,” said Acting Special Agent in Charge Kevin Kelly of HSI’s Newark Field Office.  “HSI will do all in its power as the principal enforcer of export controls to ensure that sensitive technology doesn’t fall into the wrong hands.”

According to documents filed in this case and statements made in court: Brazhnikov Jr. and his companies are part of a sophisticated procurement network that has surreptitiously acquired large quantities of license-controlled electronic components from American manufacturers and vendors and exported those items to Russia on behalf of Russian business entities that were authorized to supply them to the Ministry of Defense of the Russian Federation, the Federal Security Service of the Russian Federation  (FSB) and Russian entities involved in the design of nuclear warheads, weapons and tactical platforms.

The defendant conspired with his father, Alexander Brazhnikov Sr., owner of a Moscow-based procurement firm whose agents helped initiate the purchase of electronics components from United States vendors and manufacturers on behalf of the conspirators’ clients in Russia.  Brazhnikov Jr. finalized the purchase and acquisition of the requested components from the various distributors, then repackaged and shipped them to Moscow.  He routinely falsified the true identity of the end-user of the components and the true value of the components in order to avoid filling out required export control forms.  Brazhnikov Jr. purposefully concealed the true destination of the parts that were exported by directing that the shipments be sent to various “shell” addresses in Russia – some of which have been identified as vacant storefronts and apartments – which were established and controlled by the Moscow-based network.  All shipments initially directed to the shell addresses were redirected to a central warehouse controlled by the conspirators’ Moscow-based network.

The funds for the network’s illicit transactions were obtained from the various Russian purchases and initially deposited into one of the conspirators’ primary Russia-based accounts.  Disbursements for purchases were made from that primary Russian account through one or more foreign accounts held by shell corporations  in the British Virgin Islands, Latvia, Marshall Islands, Panama, Ireland, England, United Arab Emirates and Belize and ultimately into one of the defendant’s U.S.-based accounts.  The network’s creation and use of dozens of bank accounts and shell companies abroad was intended to conceal the true sources of funds in Russia, as well as the identities of the various Russian defense contracting firms receiving U.S. electronics components.

The money laundering conspiracy charge to which Brazhnikov Jr. pleaded guilty carries a maximum potential penalty of 20 years in prison and a $500,000 fine.  The smuggling and IEEPA conspiracy charges carry a maximum potential penalty, per count, of five years in prison and a $250,000 fine.  Sentencing is scheduled for Sept. 15, 2015.  Brazhnikov Jr. also agreed to the entry of a forfeiture money judgment of $65 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Frankel in Newark; the DOC, under the direction of Special Agent in Charge Simon, New York Field Office; special agents of ICE-HSI, under the direction of Acting Special Agent in Charge Kelly.  He also thanked officers from the Union County, New Jersey, Police Department, under the direction of Captain Chris Debbie; and officers of the Mountainside Police Department, under the direction of Police Chief Allan Attanasio, for their important contributions to the investigation.  The U.S. Justice Department’s Office of International Affairs provided assistance with this case.

The government is represented by Assistant U.S. Attorneys Dennis C. Carletta of the U.S. Attorney’s Office National Security Unit, and Peter Gaeta of the office’s Asset Forfeiture and Money Laundering Unit in Newark.

NEWARK, N.J. - A Harrison, New Jersey, woman was sentenced today to 84 months in prison for robbing three banks over a three week span in Newark and Harrison – including one on Valentine’s Day, U.S. Attorney Paul J. Fishman announced.

Valeria Parziale, 36, previously pleaded guilty before U.S. District Judge Faith S. Hochberg to an information charging her with one count of bank robbery. U.S. District Judge Claire C. Cecchi imposed the sentence today in Newark federal court.

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

Parziale admitted robbing a Valley National Bank in Harrison on Jan. 30, 2014 and a Wells Fargo bank in Newark on Feb. 14, 2014. She also admitted attempting to rob a Popular Community Bank in Newark on Feb. 20, 2014. At each robbery, Parziale handed the teller a note demanding cash and threatening the use of a gun. On one occasion, she wore a wig to disguise her identity.   

In addition to the prison term, Judge Cecchi ordered Parziale to serve three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s sentencing. He also thanked the Newark, Kearny and Harrison police departments for their assistance.

The government is represented by Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.

Defense counsel: Assistant Federal Public Defender John Yauch Esq., Newark

NEWARK, N.J. – The owner and manager of a New Jersey hedge fund was arrested today and charged with allegedly orchestrating an advance fee scheme that defrauded investors of $4 million, U.S. Attorney Paul J. Fishman announced.

Nicholas Lattanzio, 58, of Montclair, New Jersey, is charged by complaint with three counts of wire fraud and two counts of securities fraud. FBI agents arrested Lattanzio at a residence in West Orange, New Jersey, this morning. He is scheduled to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

According to the complaint unsealed today:

From June 2013 through November 2014, Lattanzio allegedly orchestrated a large-scale advance fee scheme through which he, his hedge fund, the Black Diamond Capital Appreciation Fund L.P. (BD Fund), and several other related entities collected millions of dollars in upfront fees from unsuspecting investors in exchange for the promise of future loans or investment opportunities that did not materialize. Instead of investing the victims’ money and providing the loans as promised, Lattanzio allegedly stole the majority of the funds and used them for personal expenses, including the purchase of a $1 million home, a luxury vehicle, expensive jewelry and the payment of thousands of dollars in credit card debt that he incurred for other personal expenses. The credit card expenditures included more than $24,000 for a family trip to Hawaii, more than $50,000 for tickets to the New York Yankees, and thousands of dollars in clothes, restaurants, jewelry and furniture. Lattanzio did not disclose this spending to his victims, but instead mislead them into believing that their investments were safe.

In June 2013, a company engaged in the business of oil and gas operations, production, development and acquisition (Company A) began seeking external funding to develop its existing assets and acquire new assets. Company A was introduced to an individual (Individual 1) affiliated with International Lending Services, an entity that purported to market financing opportunities, including those allegedly provided by the related Black Diamond entities. Company A was told that it had to deposit $2 million with the Black Diamond entities as a prerequisite for a $20 million lending facility through a third party lender.

Prior to any exchange of funds, Lattanzio and others acting at his direction made numerous misrepresentations to Company A to induce it to transfer the $2 million deposit to the Black Diamond entities, including telling the company that the financing was all but guaranteed, but that if it failed to close within 120 days, Company A’s $2 million could be returned; the $2 million deposit would be invested with the Black Diamond entities and would entitle Company A to a limited partnership interest in the BD Fund, a successful hedge fund managed by Lattanzio; and that Company A would be one of many investors in the BD Fund, which had a five-year track record of steady earnings.

Based on these misrepresentations, on Dec. 20, 2013, Company A caused $2 million to be wired to an account controlled by Lattanzio. The funds were not held as an escrowed deposit/investment in the BD Fund. Rather, Lattanzio allegedly converted the majority of the funds to his own use. He wired approximately $124,000 to the bank account of a Land Rover dealership for the purpose of purchasing a luxury car and spent $102,185 at a luxury jewelry store in Hackensack, New Jersey, to purchase a platinum and diamond ring that included a bezel set with three separate brilliant cut diamonds that each weighed over one carat.  Over the next several months, Lattanzio continued to mislead Company A it into believing that its money was secure and that the financing was still imminent. Ultimately, when it became clear that the financing would not be provided, Company A requested the return of its $2 million per the terms of its agreement with Lattanzio. To date, however, Company A has not received any of its $2 million deposit or interest earned in connection with the deposit. Bank records confirm that Lattanzio converted the majority of Company A’s $2 million to his own benefit, including using the funds to pay private school tuition fees, golf club membership dues, credit card bills, and to purchase a luxury vehicle.

In 2014, a second company (Company B) was seeking financing to develop a hotel project in Georgia. Company B was introduced to Lattanzio and Individual A and presented with a financing package and structure similar to that presented to Company A, including a requirement that Company B deposit a substantial amount of money with the Black Diamond entities and representations that the deposit could be returned if the financing did not close.  Company B wired $1.95 million to an account controlled by Lattanzio and the BD Fund as a deposit purportedly required to secure close to $10 million in financing by a third party. Lattanzio immediately converted the funds to his own use, including by purchasing a home in Montclair for more than $1 million.

Over subsequent months following Company B’s deposit, Lattanzio employed a number of delay tactics and made additional misrepresentations to Company B to conceal his actions with respect to its deposit funds. When it became apparent to Company B that there was no funding forthcoming, it demanded the return of its escrow deposit, which Lattanzio refused. 

The wire and securities fraud counts with which Lattanzio is charged each carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The complaint also seeks forfeiture of the home Lattanzio purchased in Montclair, New Jersey, a 2013 BMW 650 and various pieces of jewelry.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to today’s arrest.  He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Andrew Calamari, and the N.J. Bureau of Securities, within the State Attorney General’s Division of Consumer Affairs, under the direction of Acting Attorney General John J. Hoffman.

The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit, and Assistant U.S. Attorney Peter Gaeta of the Office’s Asset Forfeiture and Money Laundering Unit.

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

 

NEWARK, N.J. - A Seminole, Florida, man was arrested at his home by FBI agents this morning for allegedly using phony invoices from his transportation company to obtain $220,000 from a New Jersey-based factoring business, U.S. Attorney Paul J. Fishman announced.

Karl Stehlin, a/k/a “Mark Sawyer,” 60, was charged by indictment with five counts of wire fraud. He is scheduled to appear this afternoon before U.S. Magistrate Judge Thomas B. McCoun III in Tampa, Florida, federal court.

According to the indictment:

From June 2014 through September 2014, Stehlin allegedly defrauded a Bergen County, New Jersey, factoring business that purchased accounts receivable in return for short term financing. Stehlin created a bogus Idaho-based company, Sawyer Express Transportation Inc., and emailed accounts receivable invoices to the factoring company for transportation services that were never provided. As a result, Stehlin was able to defraud the factoring company out of $220,000 in advance payment on those invoices.

The charge of wire fraud is punishable by a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s arrest. He also thanked special agents of the FBI Tampa Division, under the direction of Special Agent in Charge Paul Wysopal, for their assistance.

The charges in the indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.

The government is represented by Assistant U.S. Attorneys Lakshmi Herman and Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

 

CAMDEN, N.J. – A Wildwood, New Jersey, man today admitted defrauding a financial institution as part of a mortgage fraud scam that used phony documents and “straw buyers” to make illegal profits on over-developed condominiums in the Wildwood area, U.S. Attorney Paul J. Fishman announced.

Daniel Cardillo, 51, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to a superseding information charging him with one count of conspiracy to commit wire fraud.

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

John Leadbeater, 58, of Kearny, New Jersey, and others identified homes in Wildwood and Wildwood Crest, New Jersey. Leadbeater and others would then recruit straw buyers, including Cardillo, to purchase those properties at inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans.

Cardillo and others were able to deceive a bank into providing Cardillo a $445,141.61 loan for the purchase of 620 West Burk Avenue, Unit 102, in Wildwood. Cardillo submitted a fraudulent loan application prepared by other conspirators that contained false information about his income, assets and intended use of the property.

The conspiracy charge to which Cardillo pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Cardillo’s sentencing is scheduled for Sept. 14, 2015.

Leadbeater pleaded guilty to a superseding indictment charging him with conspiracy to commit wire fraud on March 9, 2015. His sentencing is scheduled for Sept. 14, 2015.

U.S. Attorney Fishman credited special agents from the FBI”s Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel in Newark; and special agents of IRS - Criminal Investigation in Mays Landing, under the direction of Special Agent in Charge Jonathan Larsen in Newark, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jacqueline M. Carle and Matthew T. Smith of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Justin T. Loughry, Camden

NEWARK, N.J. – The U.S. Attorney’s Office has reached an Americans with Disabilities Act (ADA) settlement with Winnewald Day Camp (Winnewald) in Lebanon, New Jersey, to resolve allegations that Winnewald refused to accommodate a child in its summer camp in 2014 because the child had diabetes, U.S. Attorney Paul J. Fishman announced today.

This matter stems from a complaint from the parent of an 11-year-old boy with Type I diabetes. Title III of the ADA prohibits discrimination on the basis of disability, including diabetes, by places of public accommodation.

According to the complaint:

Winnewald expelled the boy from its summer camp because the boy had diabetes and the camp refused to provide proper diabetes care management.

Under the settlement agreement, Winnewald has agreed to implement policies and procedures to ensure that children with disabilities are afforded full and equal opportunities to participate in and benefit from its summer camp program. Winnewald also agreed publish on its website a statement of its policy on the prohibition of disability discrimination and provide mandatory training on the ADA and its prohibition of disability discrimination to all of its employees who work in the summer camp. Winnewald will also pay a $5,000 civil penalty to the U.S. Treasury.

Under the ADA, summer camps, both private and those run by municipalities, must make reasonable modifications to enable campers with disabilities to participate fully in all camp programs and activities. This generally means that children with disabilities, including diabetes, are entitled to attend any camp or activity that non-disabled children attend, that camps must evaluate each child on an individual basis, and that camps must train their staff in the requirements of the ADA. Camps are also obligated to pay for the cost of any reasonable modifications necessary for disabled children to participate in camp activities, and parents should not be charged any additional fee beyond standard camp enrollment costs.

Individuals who believe they may have been victims of discrimination may file a complaint with the U.S Attorney’s Office at http://www.justice.gov/usao-nj/civil-rights-enforcement/complaint. Additional information about the ADA can be found at www.ada.gov, or by calling the Department of Justice’s toll-free information line at (800) 514-0301 and (800) 514-0383 (TDD).

The government is represented by Assistant U.S. Attorney Michael E. Campion of the U.S. Attorney’s Office Civil Division in Newark.

NEWARK, N.J. – A federal grand jury returned an indictment today against a supplier of narcotics to a large-scale drug trafficking organization for conspiring to distribute heroin and cocaine in Ocean and Monmouth Counties and elsewhere in New Jersey, U.S. Attorney Paul J. Fishman announced.

Thomas Shannon, a/k/a “Cuzzo,” 36, of Jersey City, New Jersey, is charged in a five-count indictment with one count of conspiracy to distribute cocaine and more than a kilogram of heroin, one count of possession with intent to distribute heroin and cocaine, one count of unlawful possession of a firearm, one count of possession of a firearm in furtherance of a drug trafficking crime, and one count of engaging in a monetary transaction in criminally derived property.  

In March 2014, 20 other individuals, including numerous alleged members of the drug trafficking organization to which Shannon allegedly supplied narcotics, were charged in two separate criminal complaints with conspiring to distribute heroin and other related offenses.  The complaint referred to the drug trafficking organization as the “Britt-Young DTO,” after its leaders, Robert Britt, a/k/a “True,” and Rufus Young, a/k/a “Equan,” a/k/a “E-Money,” a/k/a “Kintock.”  Of the individuals charged, 15 have pleaded guilty.

According to documents filed in this case:

Between October 2013 and March 2014, Shannon conspired with others to distribute heroin and cocaine in Ocean and Monmouth counties, including to the Britt-Young DTO. Shannon obtained some of his narcotics from conspirators in California, who shipped packages containing large quantities of heroin and cocaine from California to Shannon in New Jersey.  The packages were sent to a residence in Perth Amboy, New Jersey, and received by another conspirator, who then gave the packages to Shannon.  Shannon then transported the narcotics to stash house locations that he controlled in Asbury Park and Long Branch, New Jersey, where he packaged the heroin and cocaine and prepared it for distribution to other dealers.  Shannon packaged some of the heroin in small plastic bags that were “stamped” with brand names or markings to distinguish it from other narcotics sold in or around the Monmouth County area.

To pay for the drug shipments, Shannon and others acting at his direction deposited cash into numerous third-party bank accounts provided by the conspirators in California, who then withdrew the cash at bank branch locations in California.

Shannon used numerous cellular telephones to communicate with his conspirators, including through text messages, and he and his conspirators often spoke in code to disguise the illegal nature of their communications.  For example, Shannon and a leader of the Britt-Young DTO referred to cocaine as “Kristine.”  Shannon also acquired and possessed firearms, including a Smith and Wesson .38 caliber revolver and a Sturm, Ruger & Co. Inc. .40 caliber handgun.          

Shannon was initially charged by criminal complaint on March 20, 2014, and was arrested that day.

The conspiracy count with which Shannon is charged carries a minimum potential penalty of 10 years in prison, a maximum of life in prison, and a $10 million fine.  The possession of controlled substances count with which Shannon is charged carries a minimum potential penalty of five years in prison, a maximum of 40 years in prison, and a $5 million fine.  The unlawful possession of a firearm count carries a maximum potential penalty of 10 years in prison and a $250,000 fine, and the possession of a firearm in furtherance of a drug trafficking offense count carries a minimum potential penalty of five years in prison and a maximum of life in prison, which must be served consecutive to any sentence imposed in connection with the underlying drug trafficking offenses. The engaging in a monetary transaction in criminally derived property count carries a maximum potential penalty of 10 years in prison and a $250,000 fine. 

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Office, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s indictment.

The government is represented by Assistant U.S. Attorney Nicholas Grippo of the U.S. Attorney’s Office Criminal Division in Newark.

Defense Counsel:  Edward Bertuccio Esq., Toms River, New Jersey

Sentence to be Served Consecutively to 41-Month Sentence for Florida Bank Robbery

TRENTON, N.J. – A Colts Neck, New Jersey, man who defrauded dozens of investors was sentenced today to 79 months in prison for operating a $20 million Ponzi scheme out of his Fair Haven, New Jersey office and Miami residence, U.S. Attorney Paul J. Fishman announced.

Louis J. Spina, 58, previously pleaded guilty before U.S. District Judge Anne E. Thompson to an information charging him with one count of wire fraud. Judge Thompson imposed the sentence today in Trenton federal court.

In August 2014, Spina pleaded guilty to robbing a bank in Coral Gables, Florida, in May 2014, while on pre-trial release on the New Jersey fraud charge.  On Oct. 22, 2014, he was sentenced to 41 months in prison for that offense. His New Jersey sentence will be served consecutively.

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

Between August 2010 and November 2013, Spina collected $20 million from 42 investors and deposited the funds into the LJS bank account. Spina admitted he solicited victims to invest through his business, LJS Trading LLC. After receiving the funds, Spina provided each investor with a note specifying a guaranteed monthly rate of return, typically ranging from nine to 14 percent.

Over the course of the scheme, Spina only transferred $9.5 million of the investor funds into a trading account. He used the remaining $10.5 million to pay the investors’ monthly interest payments, return portions of some investors’ principals, and to pay for his own personal expenses, including car purchases, luxury apartment rental payments, and a $400,000 donation to a private university.

Spina admitted he lied to investors about the status of their funds, telling them they were making large gains despite the fact he lost all of the $9.5 million that was actually invested. When certain investors became suspicious, he reassured them by sending misleading screen shots of their account balances that reflected only temporary gains, not the total daily losses. In addition, Spina was able to defraud his investors out of an additional $1.7 million by fabricating a story about a wealthy individual planning to buy LJS, which he told them would result in a 14 to 30 percent return on their investment. Altogether, Spina’s scheme cost investors a total of $12.7 million.

In addition to the prison term, Judge Thompson sentenced Spina to three years of supervised release, ordered him to forfeit $818,000 in seized assets and ordered him to pay $12.7 million in restitution to the victims.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, New Jersey; and the U.S. Secret Service, under the direction of Special Agent in Charge Carl Agnelli in Newark, with investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Sarah M. Wolfe of the U.S. Attorney’s Office Criminal Division in Trenton.

Defense counsel: Brian P. Reilly Esq., Assistant Federal Public Defender, Trenton

CAMDEN, N.J. - An Atlantic City, N.J., man was sentenced today to 54 months in prison for engaging in a conspiracy to distribute heroin with several members of the “Dirty Block” criminal street gang – several of whom were convicted after a six-week jury trial in January – which used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City, U.S. Attorney Paul J. Fishman announced.

Ronald Davis, a/k/a “Black,” 29, previously pleaded guilty before U.S. District Judge Joseph E. Irenas to a superseding information charging him with one count of conspiracy to distribute and to possess with intent to distribute, and to distribute and to possess with intent to distribute within 1,000 feet of public housing, 100 grams or more of heroin.  Judge Irenas imposed the sentence today in Camden federal court.

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

Davis acted as a dealer, helping Dirty Block to distribute heroin in and around the public housing apartment complexes of Stanley Holmes, Carver Hall, Schoolhouse, Adams Court and Cedar Court, in Atlantic City. Davis was arrested on March 26, 2013.

In addition to the prison term, Judge Irenas sentenced Davis to six years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang (Safe Streets) Task Force, with the investigation leading to today’s guilty plea.

He also thanked the N.J. State Police; the Atlantic County Sheriff’s Office; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Northfield Police Department; the Vineland Police Department; the Brigantine Police Department; the Millville Police Department; the Mullica Township Police Department; the South Jersey Transportation Authority; and the U.S. Secret Service for their contributions.

The government is represented by Assistant U.S. Attorneys Patrick C. Askin and Justin Danilewitz of the U.S. Attorney’s Office in Camden and Special Assistant U.S. Attorney Edmund Burgos of the Atlantic County Prosecutor’s Office.

Defense counsel: Stanley O. King Esq., Woodbury, New Jersey

The president of an investment and financial services firm was sentenced today to 120 months in prison for evading taxes and defrauding dozens of investors in New Jersey, Pennsylvania, Texas and elsewhere of $5 million, announced by U.S. Attorney Paul J. Fishman for the District of New Jersey.

Everett C. Miller, 45, of Marlton, New Jersey, previously pleaded guilty before U.S. District Judge Renee Marie Bumb to information charging him with one count of securities fraud and one count of tax evasion.  Judge Bumb imposed the sentence today in Camden federal court.

According to documents filed in this case and statements made in court: Miller was the founder, chief executive officer, president, principal and sole owner of Carr Miller Capital LLC (CMC), an investment and financial services firm based in Marlton, New Jersey.  Miller and others solicited investments through the firm from individuals located in New Jersey, Pennsylvania, North Carolina, Arkansas, Texas and elsewhere.  CMC had more than 30 affiliates and related entities and more than 75 related bank accounts.  Miller controlled the firm’s finances and established himself as synonymous with CMC.  Prior to founding CMC in June 2006, Miller was a registered financial advisor at several financial institutions. 

Miller admitted that from June 2006 through December 2010, he and others issued promissory notes to more than 190 investors across the United States and Miller and CMC received $41.2 million from these investors.  The notes were provided as “securities,” but Miller and CMC never registered the notes as securities with any federal or state agency, nor were the notes exempt from such registration requirements.  The notes had a term of nine months and promised the investors returns of seven to 20 percent per year and a return of the principal investment at the end of the nine-month period.

Miller and others falsely represented to the investors that their money would be invested in certain ways, but the investors were not provided with material information about their investments or were misled about the risks of their investments.  Miller commingled and pooled the investors’ monies into one of CMC’s 75 related bank accounts.  Unbeknown to the investors, Miller used some of the monies in the following ways: to repay prior investors, most in Ponzi scheme fashion, to pay CMC and its related entities’ payrolls and operating expenses and to support Miller’s lifestyle.  Miller’s purchases included luxury automobiles; home furnishings and electronic equipment; tickets to entertainment and sporting events; travel, lodging and vacations; meals, entertainment, retail shopping; and groceries.                 

On Aug. 11, 2009, the Arkansas Securities Department (ASD) initiated an investigation of Miller, CMC and others for selling unregistered securities to investors in the form of the promissory notes.  Following the investigation, the ASD issued a cease-and-desist order against Miller, CMC and others from selling the notes.

From August 2009 through December 2010, despite knowing about the ASD’s investigation of the promissory notes and CMC’s inability to pay either the interest or the principal on them, Miller and others continued to sell the notes as unregistered securities to investors.  They issued notes to approximately 50 new investors, but never returned any of the principal to the new investors.

Miller admitted that for calendar years 2007, 2008 and 2009, he intentionally failed to provide the Internal Revenue Service (IRS) with any information regarding the proceeds that he personally received in connection with his fraudulent scheme.  Miller failed to disclose $218,770, $244,879 and $199,507 for 2007, 2008 and 2009, respectively.  In total, Miller admitted failing to report $663,156 in taxable income to the IRS, resulting in a tax loss to the government of $47,342.

At the plea proceeding, Judge Bumb entered a consent judgment and order of forfeiture in the amount of $4,999,400, which constitutes the proceeds Miller obtained as a result of the securities fraud.

In addition to the prison term, Judge Bumb sentenced Miller to three years of supervised release and ordered him to pay restitution of $22.34 million.  

U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, New Jersey; IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larson; and the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, for the investigation leading to today’s sentencing.  He also thanked the Financial Industry Regulatory Authority – Criminal Prosecution Assistance Group and the U.S. Securities and Exchange Commission’s Philadelphia Office for its assistance with this investigation.  In addition, he thanked the New Jersey Securities Fraud Prosecution Section, the Arkansas Securities Department and the Texas State Securities Board for their roles in the investigation.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the Economic Crimes Unit in Newark, New Jersey.

This case was brought in coordination with President Barack Obama’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.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.stopfraud.gov.

Targeted Dozens of Investors Across the Country

CAMDEN, N.J. – The president of an investment and financial services firm was sentenced today to 120 months in prison for evading taxes and defrauding dozens of investors in New Jersey, Pennsylvania, Texas and elsewhere of $5 million, U.S. Attorney Paul J. Fishman announced.

Everett C. Miller, 45, of Marlton, New Jersey, previously pleaded guilty before U.S. District Judge Renee Marie Bumb to an information charging him with one count of securities fraud and one count of tax evasion. Judge Bumb imposed the sentence today in Camden federal court.

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

Miller was the founder, chief executive officer, president, principal and sole owner of Carr Miller Capital LLC (CMC), an investment and financial services firm based in Marlton. Miller and others solicited investments through the firm from individuals located in New Jersey, Pennsylvania, North Carolina, Arkansas, Texas and elsewhere. CMC had more than 30 affiliates and related entities, and more than 75 related bank accounts. Miller controlled the firm’s finances and established himself as synonymous with CMC. Prior to founding CMC in June 2006, Miller was a registered financial advisor at several financial institutions.

Miller admitted that from June 2006 through December 2010, he and others issued promissory notes to more than 190 investors across the United States, and Miller and CMC received $41.2 million from these investors. The notes were provided as “securities,” but Miller and CMC never registered the notes as securities with any federal or state agency, nor were the notes exempt from such registration requirements. The notes had a term of nine months and promised the investors returns of 7 to 20 percent per year, and a return of the principal investment at the end of the nine-month period.

Miller and others falsely represented to the investors that their money would be invested in certain ways, but the investors were not provided with material information about their investments or were misled about the risks of their investments. Miller commingled and pooled the investors’ monies into one of CMC’s 75 related bank accounts. Unbeknown to the investors, Miller used some of the monies in the following ways: (1) to repay prior investors, most in Ponzi scheme fashion, (2) to pay CMC and its related entities’ payrolls and operating expenses, and (3) to support Miller’s lifestyle. Miller’s purchases included luxury automobiles; home furnishings and electronic equipment; tickets to entertainment and sporting events; travel, lodging, and vacations; meals, entertainment, retail shopping; and groceries.

On Aug. 11, 2009, the Arkansas Securities Department (ASD) initiated an investigation of Miller, CMC, and others for selling unregistered securities to investors in the form of the promissory notes. Following the investigation, the ASD issued a cease-and-desist order against Miller, CMC, and others from selling the notes.

From August 2009 through December 2010, despite knowing about the ASD’s investigation of the promissory notes and CMC’s inability to pay either the interest or the principal on them, Miller and others continued to sell the notes as unregistered securities to investors. They issued notes to approximately 50 new investors, but never returned any of the principal to the new investors.

Miller admitted that for calendar years 2007, 2008, and 2009, he intentionally failed to provide the IRS with any information regarding the proceeds that he personally received in connection with his fraudulent scheme. Miller failed to disclose $218,770, $244,879 and $199,507 for 2007, 2008 and 2009, respectively. In total, Miller admitted failing to report $663,156 in taxable income to the IRS, resulting in a tax loss to the government of $47,342.

At the plea proceeding, Judge Bumb entered a consent judgment and order of forfeiture in the amount of $4,999,400, which constitutes the proceeds Miller obtained as a result of the securities fraud.

In addition to the prison term, Judge Bumb sentenced Miller to three years of supervised release and ordered him to pay restitution of $22.34 million. 

U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larson; and the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, for the investigation leading to today’s sentencing. He also thanked the Financial Industry Regulatory Authority – Criminal Prosecution Assistance Group, and the U.S. Securities and Exchange Commission’s Philadelphia Office for its assistance with this investigation. In addition, he thanked the N.J. Securities Fraud Prosecution Section, the Arkansas Securities Department and the Texas State Securities Board for their roles in the investigation.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the Economic Crimes Unit in Newark.

This case was brought in coordination with President Barack Obama’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. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

Defense counsel: John A. Azzarello Esq., Chatham, N.J

NEWARK N.J. – A Westfield, New Jersey, man was sentenced today to 12 months in prison for his role in a large-scale mortgage fraud scheme in which he obtained more than $1 million in illegitimate proceeds, U.S. Attorney Paul J. Fishman announced.

Amedeo Gaglioti, 60, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging him with wire fraud affecting a financial institution and money laundering. Judge Wigenton imposed the sentence today in Newark federal court.

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

From December 2007 through August 2010, Gaglioti engaged in a scheme to swindle mortgage lenders by causing fake “short sale” transactions and fraudulently obtaining mortgage loans relating to properties primarily located in northern New Jersey. Gaglioti was the closing attorney for these transactions. As part of the scheme, Gaglioti would prepare two sets of false and misleading closing documents, including HUD-1s, for short sale flip transactions. Through the preparation of these documents, as well as other acts, lenders accepted proceeds of purported short sales in full satisfaction of an existing mortgage. Gaglioti also caused lenders to fund mortgages based upon false and misleading information and documentation. Gaglioti obtained more than $1 million in illegitimate proceeds as a result of the scheme.

In addition to the prison term, Judge Wigenton sentenced Gaglioti to serve three years of supervised release, ordered him to pay restitution of $2,001,245.89 and entered a forfeiture judgment of $1 million.

U .S. Attorney Fishman credited law enforcement agents of the FBI Newark Mortgage Fraud Task Force, under the direction of Special Agent in Charge Richard M. Frankel; postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi; special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Steven Perez; special agents of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), under the direction of Special Inspector General Christy Romero; special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano Gregory, for their roles in the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Lakshmi Srinivasan Herman and Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark, as well as Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.

This case was brought in coordination with President Barack Obama’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. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

Defense counsel: Angelo Servidio Esq., Nutley, New Jersey