District of New Jersey

Separate Civil Complaint Alleges Business was a Front to Buy and Sell Stolen Jewelry

NEWARK, N.J. – A Middlesex County, New Jersey, man who owns and operates a pawn shop and jewelry business in North Brunswick, New Jersey, today admitted concealing more than $340,000 in taxable income from the IRS, U.S. Attorney Paul J. Fishman announced.

Mehran “David” Balazadeh, 53, of North Brunswick, New Jersey, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an information charging him with one count of tax evasion for failing to report income received from his business, Carpet and Futon Gallery of NJ LLC, a/k/a “More Cash 4 Gold LLC,” and other sources.

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

On April 28, 2014, Balazadeh filed a 2012 individual income tax return in which he falsely stated that his taxable income was negative $47,141 and that he owed no taxes. However, Balazadeh admitted that he actually earned taxable income of $340,144 in 2012. Balazadeh’s actions resulted in a loss to the United States of $90,849.

In a separate civil complaint for forfeiture in rem filed by the U.S. Attorney’s Office, Balazadeh allegedly used More Cash 4 Gold as a front to receive large amounts of stolen jewelry and other items, including the proceeds of burglaries committed in Middlesex County and elsewhere. According to the complaint, Balazadeh sold the stolen property and used the proceeds to pay for the ongoing scheme as well as purchase real estate and other stolen items. The complaint alleges that Balazadeh directed members of the “Brown Pride Gang” to burglarize homes in North Brunswick and elsewhere and bring him stolen jewelry. During the course of the investigation, jewelry, gold and other inventory valued at approximately $800,000 was seized from Balazadeh’s business and residence.

The statements made in the civil forfeiture complaint are merely allegations and have not been admitted by Balazadeh in connection with his criminal guilty plea.

Although Balazadeh pleaded guilty to only one count of tax evasion for the 2012 tax year, his plea agreement requires that Balazadeh admit to evading income taxes for the years 2008 through 2012, and the Court will take this conduct into account at Balazadeh’s sentencing. Balazadeh faces a maximum potential penalty of five years in prison and a fine of $250,000 or twice his gain from the offense, together with the costs of prosecution. Balazadeh also agreed to file accurate tax returns and to pay the IRS all taxes and penalties owed. Sentencing is scheduled for June 8, 2015 at 10:30 a.m.

U.S. Attorney Fishman credited special agents with IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, in Newark; and special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge Kevin Kelly, with the investigation leading to today’s guilty plea. He also thanked the N.J. Office of Homeland Security & Preparedness, U.S. Customs and Border Protection, the N.J. State Commission of Investigation, the Middlesex County Prosecutor’s Office and the North Brunswick Township Police Department for their roles in the case.

The government is represented by Assistant U.S. Attorney Melissa M. Wangenheim of the U.S. Attorney’s Office General Crimes Unit.

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Defense counsel: Joseph R. Donahue Esq., River Edge, New Jersey

Balazadeh, Mehran Information
Balazadeh, Mehran Civil Complaint

NEWARK, N.J. – An Essex County, New Jersey, man was sentenced today to 121 months in prison for a carjacking that occurred in December 2012 in Union County, U.S. Attorney Paul J. Fishman announced.

Larry Brown, 24, of Newark, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with one count of theft of a motor vehicle by force, violence, and intimidation, and one count of use of a firearm in furtherance of a crime of violence. Judge Martini imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: During the morning of Dec. 26, 2012, Brown approached an individual who was sitting in a parked 2012 BMW X5 in Hillside. Brown pointed a firearm at the victim, tapped on the vehicle’s window with the gun, and ordered the victim to get out of the car. After the victim exited the vehicle, the victim was robbed of personal items by a second individual. Brown and the other individual then entered the victim’s vehicle and fled the area.

The vehicle was located in East Orange later that day and law enforcement officers observed two individuals, one of whom was Brown, walking away from the carjacked vehicle.  Brown later admitted that he carjacked the vehicle in Hillside earlier that day. Brown also told law enforcement officers where he put the keys to the carjacked vehicle and the gun he used during the carjacking, both of which were recovered by law enforcement officers.

In addition to the prison term, Judge Martini sentenced Brown to five years of supervised release and ordered him to pay $1,850 in restitution.

U.S. Attorney Fishman credited special agents of the Department of Homeland Security, Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of John P. Woods in Newark; the N.J. State Police, under the direction of Col. Rick Fuentes, Superintendent; special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankelin Newark; the Hillside Police Department, under the leadership of Chief Louis Panarese; the East Orange Police Department, under the leadership of Chief William C. Robinson; and the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace H. Park; as well as criminal investigators from the U.S. Attorney’s Office in Newark with the investigation leading to today’s sentencing. 

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

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Defense counsel: Carol Gillen Esq., Assistant Federal Public Defender, Newark

CAMDEN, N.J. - An Atlantic City, N.J., man today admitted 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, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court 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.
 
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.
 
The drug conspiracy in a protected zone charge to which Davis pleaded guilty carries a minimum penalty of one year in prison, a maximum penalty of 40 years in prison, a maximum potential fine of $2 million and a minimum period of supervised release of six years. Sentencing is scheduled for June 5, 2015.

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.

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

NEWARK, N.J. – A Staten Island, New York, physician’s assistant today admitted 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.

Leonard Marchetta, 48, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes. 

Including Marchetta, 36 people – 24 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 $10.5 million to date through forfeiture.

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

Marchetta admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $3,000 per month. Marchetta’s referrals generated approximately $660,000 in lab business for BLS.

On April 9, 2013, federal agents arrested David Nicoll, 40, of Mountain Lakes, New Jersey, Scott Nicoll, 34, of Wayne, New Jersey, a senior BLS employee and David Nicoll’s brother, and Craig Nordman, 36, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 45, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme

The bribery count to which Marchetta pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 17, 2015. As part of his guilty plea, Marchetta must forfeit $72,000, representing the total bribe monies received from BLS.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; 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 leading to today’s guilty pleas.

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

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Defense counsel: Leo Duval Esq., Staten Island

NEWARK, N.J. – A former Newark City Hall employee was sentenced today to three years of probation for producing fraudulent New Jersey birth certificates, U.S. Attorney Paul J. Fishman announced.

Cory Cooke, 45, of Newark, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging him with one count of producing false identification documents. Judge Wigenton imposed the sentence today in Newark federal court.

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

Cooke was previously employed by the City of Newark at its Office of Vital Statistics and was responsible for issuing official New Jersey birth certificates. From August 2013 to October 2013, Cooke produced four fraudulent New Jersey birth certificates using four different individuals’ personal identifying information, which Cooke had acquired from a conspirator. After producing the fraudulent New Jersey birth certificates, Cooke gave the documents to his conspirator, who subsequently sold them.

As part of the sentence, Judge Wigenton ordered Cooke to spend six months at a residential re-entry center/halfway house and ordered 200 hours of community service.

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

The government is represented by Assistant U.S. Attorney J. Jamari Buxton of the U.S. Attorney’s Office Criminal Division in Newark.

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Defense counsel: Stephen N. Dratch Esq., Livingston, New Jersey

Altered Patients’ Medical Records to Conceal Scheme

NEWARK, N.J. – A family medicine physician with offices in Cresskill and Little Falls, New Jersey, was arrested this morning and charged with fraudulently billing Medicare, Medicaid and private health care insurance companies hundreds of thousands of dollars for physician office visits that were never rendered, U.S. Attorney Paul J. Fishman announced.

Albert Ades, 60, of Englewood, New Jersey, was indicted by a federal grand jury in Newark on Feb. 20, 2015, on one count of health care fraud and 35 counts of making false statements relating to health care matters. The indictment was unsealed today. Ades is scheduled to appear later today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.

According to the indictment:

Ades, a licensed family medicine doctor who owns and operates Albert Ades M.D., P.A., fraudulently billed insurers for face-to-face physician office visits. Instead, he wrote prescriptions, authorized refills, or performed other tasks, without ever seeing those patients on the billed dates.  Ades altered, and instructed individuals working at his medical practice to alter, patients’ medical charts by inserting fabricated blood pressure readings, among other notations, to make it appear as if patients had visited Ades’s office on dates for which Ades had billed their insurance plans.

From 2005 through June 2014, Ades billed Medicare, Medicaid and various private payors for physician office visits with patients on dates when he, in fact, had written prescriptions, authorized refills, or performed other tasks, without ever having seen those patients on the billed dates. To conceal his scheme, Ades altered patients’ medical records to make it appear as if patients had been seen at his office, when in fact they had not been there. When one insurance plan initiated an audit after a patient reported Ades for billing prescription refills as office visits, Ades shredded original medical records and created bogus medical records to obstruct the audit.  Between 2008 and 2013, at least four individuals working at Ades’s medical offices told Ades that his billing of prescriptions or refills out as office visits was illegal.  

The charge of health care fraud carries a maximum penalty of up to 10 years in prison.  Each of the 35 charges of making a false claim as to health care matters carries a maximum penalty of up to five years in prison. Each count in the indictment carries a maximum fine of $250,000 or twice the gross gain or loss resulting from the crime.

U.S. Attorney Fishman credited special agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Richard M. Frankel; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and investigators with the U.S. Attorney’s Office with the investigation leading to the indictment.   

The government is represented by Jane H. Yoon of the U.S. Attorney’s Health Care and Government Fraud 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.

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Defense counsel: Miles Feinstein Esq., Clifton, New Jersey

NEWARK, N.J. – Two Passaic County, New Jersey, men were arrested by federal agents this morning for allegedly conspiring to steal more than $1.4 million dollars from the U.S. Government through a fraudulent food stamps scheme, U.S. Attorney Paul J. Fishman announced.

Jacques Gary Doghram Apelian, 61, of Haledon, New Jersey, and Wael Rabee, 32, of Paterson, New Jersey, were charged by complaint with one count of conspiring to steal monies from the United States. Apelian and Rabee were arrested by agents of the Department of Agriculture, Office of Inspector General and are scheduled to appear this afternoon before U.S. Magistrate Judge James B. Clark III in Newark federal court.

According to the complaint:

Apelian and Rabee, employees of Broadway Deli & Grocery in Paterson, are charged in connection with a scheme in which they unlawfully redeemed Supplemental Nutrition Assistance Program (SNAP) benefits (formerly known as food stamps) in exchange for cash or for the purchase of non-food items. The program is administered by the U.S. Department of Agriculture. Retail food stores approved for participation in SNAP may sell food in exchange for food stamp benefits. They may not exchange food stamp benefits for cash.

SNAP benefits are loaded onto Electronic Benefits Transfer (EBT) cards. The EBT cards are automatically credited with the appropriate level of food stamp benefits for each SNAP recipient. Benefits are electronically transferred from the U.S. Treasury into a bank account designated by the authorized retailer. Authorized retailers receive training material relating to the rules and regulations of SNAP prior to receiving authorization and are responsible for training employees on the proper acceptance and handling of SNAP benefits. To complete a purchase, a SNAP recipient swipes an EBT card through a point of sale terminal at the authorized retailer and enters a personal identification number. If approved, the recipient’s account is debited for the amount of the purchase and the funds are credited to the authorized retailer’s account.

From October 2011 through December 2014, Broadway was authorized to accept SNAP benefits. Rabee and Apelian allegedly entered fictitious dollar amounts for SNAP EBT transactions, gave recipients a percentage of the transaction’s value in cash and kept the remainder. For example, a recipient might purchase eligible food items worth $5.00. The defendants would swipe the recipient’s EBT card for $95.00, which would be debited from the recipient’s EBT account and credited to Broadway’s bank account. The defendants would then give the recipient a portion of the cash and keep a portion of the proceeds, typically 33 percent of the total amount of SNAP benefits debited from the EBT card (not including the costs of store items that were purchased).

SNAP EBT benefit purchases over $50 are rare in small groceries like Broadway and usually indicate fraud. From January 2013 through December 2013, the total dollar amount of Broadway EBT transactions exceeding $50 was $533,452. From January 2014 through December 2014, the total dollar amount of EBT transactions exceeding $50 was $556,310.

Law enforcement agents uncovered the scheme using a cooperating witness (CW). From October 2012 to December 2014, the CW engaged in approximately fifteen “purchases” at Broadway. During each of these transactions, the CW exchanged SNAP EBT benefits for cash with the defendants, in violation of SNAP rules and regulations.

Based on an analysis EBT transactions, purchases over $50 made at Broadway from October 2011 through December 2014 totaled $1,493,294.

The charge of conspiracy is punishable by a maximum potential penalty of five years in prison and a fine of $250,000.

U.S. Attorney Fishman credited special agents of the U.S. Department of Agriculture, Office of Inspector General, under the direction of Special Agent in Charge William G. Squires Jr., in New York; the Paterson Police Department; and Detectives Craig Metz and Iris Reyes of the N.J. Human Services Police for their assistance.

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

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Apelian, Jacques Gary Doghram and Rabee, Wael Complaint

NEWARK, N.J. - A Cape May, New Jersey, man surrendered to U.S. Marshals today for shooting at pilot whales off the New Jersey coast, U.S. Attorney Paul J. Fishman announced.

Daniel Archibald, 27, is charged by complaint with one count of violating the Marine Mammal Protection Act. He appeared this afternoon in Newark federal court before U.S. Magistrate Judge James B. Clark III in Newark federal court. He was released on $10,000 unsecured bond, with travel restricted to the United States, except for fishing in international waters. He is required to surrender all firearms and firearms purchaser identification cards and is prohibited from using or possessing a firearm on land or sea.

According to the complaint unsealed today:

Archibald, a tuna fisherman, allegedly shot at pilot whales while aboard the fishing vessel “Capt Bob.” Pilot whales are protected under the Marine Mammal Protection Act of 1972, a statute that prohibits the hunting, killing, capture or harassment of any marine mammal. Harassment under the statute includes any act of pursuit, torment or annoyance that has the potential to injure a marine mammal in the wild.

On Sept. 24, 2011, an 11-foot, 740-pound pilot whale beached itself in Allenhurst, New Jersey, and died shortly thereafter. A necropsy uncovered a .30 caliber bullet lodged in the whale’s jaw. The bullet wound triggered an extensive infection that caused the whale to starve to death a month later.

Review of the Capt Bob’s vessel monitoring system confirmed that it was in New Jersey fishing waters for much of August 2011, the approximate time that the whale was shot. Also, nearly a month before the pilot whale washed ashore, defendant Archibald posted a Facebook photograph of a tuna head on a hook with the caption “thanks a lot pilot whales.”

Special agents eventually searched the Capt Bob and found a Mosin-Nagant, a World War II rifle that has not been manufactured in several decades. Forensic analysis revealed that the bullet found in the whale was similar in all general rifling characteristics to test bullets fired from Archibald’s rifle. When interviewed by special agents, Archibald admitted that he had “spray[ed]” bullets at pilot whales in an effort to chase them away.

The violation charged carries a maximum penalty of one year in prison and a statutory maximum fine of $100,000 or twice the gross gain or loss resulting from the offense.

U.S. Attorney Fishman credited special agents of the National Oceanic and Atmospheric Administration, Office of Law Enforcement, under the direction of Assistant Special Agent in Charge Jeffrey Ray, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Justin Herring of the U.S. Attorney’s Office General Crimes Unit, and Assistant U.S. Attorney Kathleen P. O’Leary of the Health Care and Government Fraud Unit, in Newark.

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

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Defense counsel: William H. Hughes Esq., Atlantic City, N.J.

NEWARK, N.J. – The president and CEO of Proteonomix Inc., a biotechnology company in Paramus, New Jersey, today admitted misleading the U.S. Securities and Exchange Commission (SEC) about his business dealings with his father-in-law, U.S. Attorney Paul J. Fishman announced.

Michael M. Cohen, 49, of West Orange, New Jersey, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to an information charging him with one count of certifying false statements with the SEC.

According to documents filed in this case and statements made in court: Proteonomix performed stem cell research and developed cosmeceutical products. Cohen’s father-in-law was the president of Nancyco of NY Inc., Joe & Sam of New York Inc., Mollyco of NY Inc., and JSMNM Inc. (collectively, the “FIL Companies”) that purportedly performed work for Proteonomix in exchange for Proteonomix shares.

As the president, CEO, and chief financial officer for Proteonomix, Cohen was required to accurately disclose the company’s financial information to the investing public. SEC regulations require disclosure of “related-party transactions” involving immediate family members with a direct or indirect material interest. Cohen admitted he exercised control over the FIL Companies’ bank and brokerage accounts and failed to disclose they were related parties under SEC regulations. In a September 2012 filing with the SEC, Proteonomix and Cohen knowingly failed to disclose that an agreement between Proteonomix and Mollyco, in which $2 million in debt was converted into shares of Proteonomix stock, was a related-party transaction.

The false statements count to which Cohen pleaded guilty carries a maximum potential penalty of 10 years in prison and a $1 million fine. Sentencing is scheduled for May 27, 2015.

The SEC today filed a civil complaint against Cohen.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and SEC’s Division of Enforcement, under the direction of Associate Director Antonia Chion, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Lakshmi Srinivasan Herman of the U.S. Attorney’s Economic Crimes Unit in Newark.

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Defense counsel: Jacob Frenkel Esq., Baltimore, Maryland.

CAMDEN, N.J. – A Fort Washington, Pennsylvania, man was sentenced today to 87 months in prison for his role in three bank robberies in Pennsylvania, U.S. Attorney Paul J. Fishman announced.

On March 4, 2014, Kyle Wilson, 23, pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information charging him with three counts of bank robbery. In June 2012, Wilson pleaded guilty before Judge Rodriguez to a separate information charging him with traveling from Pennsylvania to New Jersey to commit an aggravated assault in furtherance of an extortion scheme. All three of the bank robberies to which Wilson pleaded guilty occurred after his June 2012 plea while he was released on bail pending sentencing. Judge Rodriguez imposed the sentence today in Camden federal court.

Although the three bank robberies occurred in Pennsylvania, Wilson waived his right to contest venue so that all of his pending criminal charges – the robberies and the prior aggravated assault conviction – could be resolved in the District of New Jersey.
According to documents filed in this case and statements made in court:

• On March 6, 2013, Wilson entered a Citizens Bank located inside a Giant Store in Montgomeryville, Pennsylvania. He approached the teller and handed him a withdrawal slip that read “the gun will go off, give me some money.”  The teller handed Wilson cash, and Wilson left the store.

• On March 11, 2013, Wilson entered a PNC Bank located inside a Giant Store in Plymouth Meeting, Pennsylvania. He approached the teller and handed him a note.  The teller then heard Wilson warn him not to “hit any buttons” and demand money. The teller handed Wilson cash and Wilson left the store.

• On March 14, 2013, Wilson entered a First Niagara Bank in Lower Providence Township, Pennsylvania. He approached the teller, displayed what appeared to be a small black gun, and demanded money. The teller handed Wilson cash, and Wilson left the store.

In addition to the prison term, Judge Rodriguez sentenced Wilson to serve three years of supervised release and pay $8,444 in restitution.

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; the Department of Labor-Wage and Hour Division, under the direction of Mark Watson, regional administrator; 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. He also thanked the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

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

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TRENTON, N.J. - A Florida man was sentenced today to 110 months in prison for producing and selling potentially deadly toxins ricin and abrin for use as weapons and conspiring to kill a woman in the United Kingdom, U.S. Attorney Paul J. Fishman announced.

Jesse William Korff, 20, of Labelle, Florida, pleaded guilty before U.S. District Judge Peter G. Sheridan on Aug. 12, 2014, to an information charging him with five counts of developing, producing, transferring and possessing toxins, five counts of smuggling toxins and one count of conspiring to kill a person in a foreign country.

Korff was arrested in Florida on Jan. 18, 2014, following a joint investigation by U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI) and the FBI of Korff’s sales of toxins through an underground, Internet-based marketplace known as “Black Market Reloaded” (BMR).  

“Jesse Korff peddled his poison in a shadowy, online network favored by cybercriminals,” U.S. Attorney Fishman said. “He also offered guidance on its effective use, and his sentence today appropriately took account of his participation with an overseas customer in an attempted murder plot. Fortunately, law enforcement was able to intercede before Korff could conclude his deadly transaction.”

“This sentence should serve as a warning to those who capitalize from the use of underground websites such as BMR,” John P. Woods, acting special agent in charge of HSI Newark, said. “HSI will maintain its unrelenting commitment to protecting our land borders as well as virtual borders from individuals like Korff. Anyone who mistakenly thinks that they can get away with these types of crimes by hiding in the endless depths of the internet must know that HSI will seek them out and bring them to justice.”

“Jesse Korff acquired abrin and ricin, potentially lethal toxins, through an underground internet-based marketplace, so they could be used for deadly purposes,” Richard M. Frankel, FBI Special Agent in Charge, Newark, said. “Thankfully, with the coordinated efforts of our law enforcement partners, and the tactical and technical expertise of the FBI’s Joint Terrorism Task Force, he was intercepted and his potentially deadly threats did not become a reality.”

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

Beginning in April 2013, HSI special agents in Newark launched an investigation of illicit sales activity on BMR. The website provided a platform for vendors and buyers to conduct anonymous online transactions involving the sale of a variety of illegal goods, including biological agents, toxins, firearms, ammunition, explosives, narcotics and counterfeit items.

From August 2013 through January 2014, Korff maintained a seller’s profile on BMR under the moniker “Snowman840.”  Korff advertised the sale of deadly toxins and provided his prospective purchasers with information about quantities necessary to kill a person of a given weight, along with instructions on how to secretly administer the toxin so as to avoid suspicion by law enforcement officials. Korff sold various quantities of ricin and abrin to international purchasers located in India, Austria, Denmark, and England. Korff smuggled the toxins from Florida to the international purchasers by concealing the toxins in packages sent through the U.S. Postal Service.

On at least one occasion in December 2013, Korff agreed to produce, and ultimately provided, a quantity of abrin to a purchaser in London who intended to poison and kill an individual she claimed was her mother. After the purchaser’s receipt and administration of the initial dose, which was ineffective, Korff agreed to provide a second quantity of the toxin in order to assist the purchaser in the implementation of the murder plot.

Before Korff had an opportunity to smuggle the second dose of abrin to the London purchaser, an HSI undercover agent contacted Korff through BMR and commenced negotiations for the sale of two liquid doses of abrin. During their online conversations, Korff told the agent about his delivery methods – concealing vials in a carved-out and re-melted candle – and discussed how much abrin was needed to kill a person of a particular weight and how best to administer the toxin. Korff also assured the agent that a victim’s poisoning symptoms would mimic a bad case of the flu, subsequently resulting in death.  Korff claimed that the toxin would not ordinarily be detected in an autopsy.

Korff and the agent agreed on a total purchase price of $2,500 for two doses of the poison, which was intended to be smuggled from Florida, through New Jersey, en route to a destination in Canada. Korff designated a prearranged location for the transfer of the toxins, and e-mailed the agent pictures of a specific spot at a rest stop approximately 10 miles outside Fort Myers, Florida, where he planned to leave a package containing the abrin.

On the arranged day, Korff dropped off a fast food bag containing two wax candles at the location. Another undercover agent collected the bag and left behind the required payment. Law enforcement had Korff under surveillance throughout the transaction.

Subsequent forensic analysis by the FBI of the liquid contained within the vials revealed the presence of active abrin. Even a small dose of the toxin is potentially lethal to humans if ingested, inhaled or injected – causing death within 36 to 72 hours from the time of exposure.

Following Korff’s arrest, law enforcement agents conducted an exhaustive, three day search of Korff’s property. As a result of those efforts, agents recovered several computers, castor beans, rosary peas, capsules, vials, jars, syringes, filters, respirators and other items commonly utilized in the manufacture, production, sale, packaging, and shipping of toxins and chemical substances, as well as numerous firearms. Among the items recovered was the second liquid dose of abrin that Korff had intended to ship to the London purchaser. Significantly, information and evidence obtained by U.S. law enforcement agents in this case was shared with, and successfully used by authorities in England, Denmark, and Austria to disrupt related criminal activities in those nations.

In addition to the prison term, U.S. District Judge Anne E. Thompson sentenced Korff to five years of supervised release and fined him $1,000.

U.S. Attorney Fishman credited special agents of HSI, under the direction of Special Agent in Charge Woods in Newark; special agents of the FBI in Newark, under the direction of Special Agent in Charge Frankel; and FBI special agents under the direction of Special Agent in Charge Paul Wysopal, Tampa Division, with the investigation leading to today’s sentence.  He also thanked HSI in Ft. Myers, Florida, under the direction of Special Agent in Charge Susan McCormick, for their work. The U.S. Attorney also thanked the FBI’s Joint Terrorism Task Force, including the U.S. Postal Inspection Service and the Glades County, Henry County and Lee County, Florida, sheriff’s offices for their assistance. Vital support was provided by the Justice Department’s National Security Division Counterterrorism Section and FBI WMD Directorate in Washington, the FBI Laboratory Division, the DHS National Bioforensic Analysis Center; the U.S. Attorney’s Office for the Middle District of Florida; and the London Metropolitan Police Service (MPS), SO15 Counter Terrorism Command, under the direction of Commander Duncan Ball.

The government is represented by Assistant U.S. Attorney Dennis C. Carletta of the U.S. Attorney’s Office National Security Unit in Newark.

14-061                                               

Defense counsel:  David Holman Esq., Newark

Defendant Brought From the Netherlands After Fighting Extradition for Over Two Years

NEWARK, N.J. – A Russian national appeared in Newark federal court today after being extradited from the Netherlands to face charges that he conspired in the largest international hacking and data breach scheme ever prosecuted in the United States, New Jersey U.S. Attorney Paul J. Fishman, U.S. Secret Service Acting Director Joseph P. Clancy and Assistant Attorney General Leslie Caldwell and announced.

Vladimir Drinkman, 34, of Syktyykar and Moscow, Russia, was arrested in the Netherlands on June 28, 2012, and charged in a scheme that targeted major corporate networks, stole more than 160 million credit card numbers, and resulted in hundreds of millions of dollars in losses. He had been detained by the Dutch authorities pending the resolution of the extradition proceedings.

He appeared today before U.S. Magistrate Judge James B. Clark III, entered a plea of not guilty to all 11 counts charged in the indictment and was ordered detained. Trial before U.S. district Judge Jerome B. Simandle is scheduled for April 27, 2015.

“Drinkman’s extradition on the indictment this office brought more than a year and a half ago shows how relentlessly we will pursue those who are charged with these serious crimes,” U.S. Attorney Fishman said. “The incredibly sophisticated work with our partners at the U.S. Secret Service to uncover this enormous, far-reaching scheme demanded an equal effort by our colleagues at the Department of Justice Criminal Division in Washington and our law enforcement partners overseas to bring the defendant back to face these charges.”

“This case demonstrates our commitment to fulfilling an important part of our integrated mission; that of protecting our Nation’s critical financial infrastructure,” Secret Service Acting Director Joseph P. Clancy said. “Our success in this investigation and other similar investigations is a credit to our skilled and relentless cyber investigators. Our determination, coupled with our network of foreign law enforcement partners, ensures that our investigative reach can expand beyond the borders of the United States.”

“Cyber criminals conceal themselves in one country and steal information located in another country, impacting victims around the world,” Assistant Attorney General Caldwell said.  “Hackers often take advantage of international borders and differences in legal systems, hoping to evade extradition to face justice.  This case and today's extradition demonstrates that through international cooperation, and through great teamwork between the Department of Justice and the Department of Homeland Security, we are able to bring cyber thieves to justice in the United States, wherever they may commit their crimes.”

Drinkman and four co-defendants allegedly sought corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information they could exploit for profit. The defendants are charged with attacks on NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard. It is not alleged that the NASDAQ hack affected its trading platform.

According to the second superseding indictment, unsealed in Newark federal court July 25, 2013, and other court filings:

The five defendants each served particular roles in the scheme. Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, each specialized in penetrating network security and gaining access to the corporate victims’ systems. Roman Kotov, 33, of Moscow, also a hacker, specialized in mining the networks Drinkman and Kalinin compromised to steal valuable data. The hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 27, of Odessa, Ukraine. Dmitriy Smilianets, 31, of Moscow, sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 33, of Miami, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: One charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second indictment charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.

Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012. Smilianets was extradited Sept. 7, 2012, and remains in federal custody. Kalinin, Kotov and Rytikov remain at large. All of the defendants are Russian nationals except for Rytikov, who is a citizen of Ukraine.

The Attacks

The five defendants conspired with others to penetrate the computer networks of several of the largest payment processing companies, retailers and financial institutions in the world, stealing the personal identifying information of individuals. They took user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. Conservatively, the conspirators unlawfully acquired more than 160 millioncard numbers through hacking.

The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants placed malicious code, or malware, on the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were able to regain access through persistent attacks. 

Instant message chats obtained by law enforcement revealed the defendants often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway. The defendants had malware implanted in multiple companies’ servers for more than a year.

The defendants used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

After acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He would charge approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by either withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

The defendants used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.

Over the course of the conspiracy, the defendants communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.

To protect against detection by the victim companies, the defendants altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.

*          *          *

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.

The maximum potential penalties for each defendant per count are as follows:

Defendants

Violation

Maximum Penalty/Count

All

Conspiracy to gain unauthorized access to computers

5 years; $250,000 fine or twice the gain or loss from the offense

2

All

Conspiracy to commit wire fraud

30 years; $1 million fine or twice the gain or loss from the offense

3-8

Drinkman
Kalinin
Kotov
Smilianets

Unauthorized access to computers

5 years; $250,000 fine or twice the gain or loss from the offense

9-11

Drinkman
Kalinin
Kotov
Smilianets

Wire fraud

30 years; $1 million fine or twice the gain or loss from the offense

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations, under the direction of Acting Director Joseph P. Clancy, and special agents from the Newark Division, under the direction of Special Agent in Charge Carl Agnelli, for the ongoing investigation.

The government is represented by Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit, Trial Attorney Rick Green of the Criminal Division’s Computer Crime and Intellectual Property Section, and Judith Friedman of the Office of International Affairs.

U.S. Attorney Fishman thanked the Department’s Office of International Affairs in Washington for their extraordinary support, as well as public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.

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

15-060                                               

Defense counsel: Vladimir Drinkman: Florian Miedel Esq., New York; Bart Stapert Esq., Amsterdam, Netherlands
Dmitriy Smilianets: Andrey Tikhomirov Esq., Brooklyn, N.Y.

NEWARK, N.J. – An Irvington, New Jersey, man was charged today with brandishing a firearm while stealing a car in Newark, U.S. Attorney Paul J. Fishman announced.

Raheem Sylla, 23, of Irvington, is charged by complaint with one count of theft of a motor vehicle by force, violence, and intimidation, and one count of use of a firearm in furtherance of a crime of violence. The defendant is scheduled to appear this afternoon before U.S. Magistrate Judge Michael A. Hammer.

According to the criminal complaint:

During the early morning of Sept. 22, 2014, Sylla and a conspirator allegedly approached a 2000 Chevrolet Tahoe parked on a Newark street. Sylla went to the front driver’s window of the Tahoe, pointed a firearm at the driver’s chest and ordered the driver out of the car. The other conspirator approached the front passenger’s side window of the Tahoe and ordered the other passenger out of the car. Sylla and the other male then entered the car and fled.

A short time later, a Rutgers University police officer attempted to pull the Tahoe over for a traffic stop. Sylla tried to escape by driving away at a high rate of speed, but soon crashed and was subsequently apprehended by the Rutgers University police officer. A firearm was recovered from the Tahoe. Sylla has been in state custody since he was apprehended.

The carjacking count with which Brown is charged is punishable by a maximum potential penalty of 15 years in prison. The charge of use of a firearm in furtherance of a crime of violence is punishable by a maximum potential penalty of life in prison and a mandatory minimum sentence of seven years in prison, which must run consecutively to any other prison term. Each of the two counts also carries a maximum fine of $250,000.

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives under the direction of Special Agent in Charge George P. Belsky; the Newark Police Department, under the direction of director Eugene Venable and Chief Anthony Campos; the Rutgers University Police Department, under the direction of Executive Director of Police Services Kenneth Cop; and the Essex County Prosecutor’s Office, under the direction of Acting Essex County Prosecutor Carolyn A. Murray; as well as criminal investigators from the U.S. Attorney’s Office in Newark with the investigation leading to the charges.

The government is represented by Special Assistant U.S. Attorney Andrew R. Tyler of the U.S. Attorney’s Office Criminal Division in Newark.

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

15-059                            

Sylla, Raheem Complaint

NEWARK, N.J. –  Two New Jersey men are in FBI custody today on charges arising from a scheme to extort thousands of dollars in corrupt payments in connection with arranging approvals to provide landfill materials for a Hudson County Improvement Authority project, U.S. Attorney Paul J. Fishman announced.

Gerard Pica, 65, of Middletown, New Jersey, and James Castaldo, 59, of Beachwood, New Jersey, were indicted by a federal grand jury Feb. 10, 2015, and each charged with two counts of conspiracy to commit extortion under color of official right affecting interstate commerce, two counts of extortion under color of official right affecting interstate commerce, and two counts of accepting and agreeing to accept corrupt payments. All the charges are related to Gerard Pica’s employment at the Hudson County Improvement Authority (HCIA). They are scheduled to appear this afternoon before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.

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

The HCIA was overseeing the construction of a nine-hole public golf course located at Lincoln Park West in Jersey City, New Jersey (the “LPW project”).  As part of its construction, the LPW project required several hundred thousand cubic yards of soil, fill material and crushed stone to be incorporated into the site, as well as to serve as road bedding during the construction of the golf course. As the overseer of the LPW project, one of the functions of the HCIA – either directly or through a designated contractor – was to serve as a gatekeeper for any material to be delivered to the LPW site. It was the HCIA’s responsibility to solicit, evaluate and decide which contractors’ proposals to accept for the provision of soil and fill material for the LPW project.

From at least August 2010 to November 2011, Pica and Castaldo and others schemed to obtain payments from certain contractors in exchange for Pica and another individual using their influence over the HCIA on two matters. Within the HCIA, an individual referred to in the indictment as “Employee 1” had authority and discretion over matters involving the selection of, and the administration of the conduct of, contractors seeking to deliver soil and fill material to the LPW project site. As a result of Pica’s employment with the HCIA and his association with Employee 1, Pica had the ability to influence the HCIA’s decisions regarding the selection of contractors to provide soil and fill material to the LPW project.

The first three counts of the indictment involve an alleged scheme by Pica and Castaldo to obtain corrupt payments from a person listed in the indictment as “Individual 1,” who was an associate of Pica and the owner of an environmental consulting firm.  Pica and Castaldo agreed to obtain payments from Individual 1 to be shared among Pica, Castaldo and Employee 1 in exchange for Pica and Employee 1 using their authority and influence at the HCIA to ensure that Individual 1 and Individual 1’s company received approval to provide soil and fill material for the LPW project, at a certain per ton price to be paid by Individual 1 to the HCIA.  It was part of the agreement that Individual 1 would pay Castaldo $3 per ton of fill and soil material delivered to the site for the benefit of Pica, Castaldo and Employee 1.

In Counts Four through Six of the indictment, Pica and Castaldo arranged to obtain corrupt payments from a person referred to in the indictment as Individual 3, the owner of a recycling business in Bayonne, New Jersey.  Pica and Castaldo agreed to obtain payments from Individual 3 to be shared among Pica, Castaldo, and Employee 1 in exchange for Pica and Employee 1 again using their authority and influence at the HCIA to ensure that Individual 3 and Individual 3’s company received approval to provide fill materials, including crushed stone, for the LPW project, at a certain per cubic yard price to be paid by Individual 3 to the HCIA.  It was part of the arrangement that Individual 3 would pay Castaldo $2 per cubic yard of fill and soil material delivered to the site for the benefit of Pica, Castaldo and Employee 1.

Counts One, Two, Four and Five of the indictment carry a maximum penalty of 20 years in prison; Counts Three and Six carry a maximum penalty of 10 years in prison.  The maximum fines for all of the violations are $250,000 or twice the gain or loss resulting from the offense.

The indictment also seeks forfeiture of $53,861 in connection with the commission of the offenses charge in the indictment.

U.S. Attorney Fishman credited special agents from the FBI, under direction of Special Agent in Charge Richard M. Frankel in Newark and special agents with the N.J. State Commission of Investigation, under the direction of Executive Director Philip J. Degnan, for the investigation leading to the charges.

The government is represented by Assistant U.S. Attorneys David L. Foster and Mark McCarren of the U.S. Attorney’s Office, Special Prosecutions Division in Newark.

15-055                                                                 

Defense counsel: Gerard Pica: Gerald Krovatin Esq., Newark
James Castaldo: TBD

TRENTON, N.J. – A licensed pediatrician practicing in Jersey City, New Jersey, today admitted fraudulently billing Medicaid for more than 1,000 wound repair procedures that were never performed, U.S. Attorney Paul J. Fishman announced.

Badawy M. Badawy, 52, of Bayonne, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to Count One of an indictment charging him with health care fraud.

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

Badawy owned and operated Sinai Medical Center of Jersey City LLC, a medical practice focusing on pediatric and family medicine. From January 2004 through December 2008, Badawy submitted thousands of claims to Medicaid for wound repair procedures related to the repair of superficial wounds over 30 centimeters in length on a patient’s face, ears, eyelids, nose or lips as well as the repair of previously closed wounds. Badawy claimed to have performed these treatments on his patients, most of whom were children.

During his plea hearing Badawy admitted that he regularly submitted claims for procedures that were never performed. As a result of his false claims, Badawy received $196,911 in Medicaid payments.

The charge of health care fraud carries a maximum penalty of up to 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss resulting from the crime. Sentencing is scheduled for May 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 and the 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 investigation leading to today’s guilty plea.   

The government is represented by Danielle Alfonzo Walsman and Michael H. Robertson of the U.S. Attorney’s Health Care and Government Fraud 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.

15-058                                            

Defense counsel: Peter R. Willis Esq., Jersey City

TRENTON, N.J. – A licensed pediatrician practicing in Jersey City, New Jersey, today admitted fraudulently billing Medicaid for more than 1,000 wound repair procedures that were never performed, U.S. Attorney Paul J. Fishman announced.

Badawy M. Badawy, 52, of Bayonne, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to Count One of an indictment charging him with health care fraud.

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

Badawy owned and operated Sinai Medical Center of Jersey City LLC, a medical practice focusing on pediatric and family medicine. From January 2004 through December 2008, Badawy submitted thousands of claims to Medicaid for wound repair procedures related to the repair of superficial wounds over 30 centimeters in length on a patient’s face, ears, eyelids, nose or lips as well as the repair of previously closed wounds. Badawy claimed to have performed these treatments on his patients, most of whom were children.

During his plea hearing Badawy admitted that he regularly submitted claims for procedures that were never performed. As a result of his false claims, Badawy received $196,911 in Medicaid payments.

The charge of health care fraud carries a maximum penalty of up to 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss resulting from the crime. Sentencing is scheduled for May 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 and the 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 investigation leading to today’s guilty plea.   

The government is represented by Danielle Alfonzo Walsman and Michael H. Robertson of the U.S. Attorney’s Health Care and Government Fraud 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.

15-058                                           

Defense counsel: Peter R. Willis Esq., Jersey City

NEWARK, N.J. – A Newark, New Jersey, man was sentenced today to 168 months in prison for brandishing a shotgun during an armed carjacking in Little Falls, New Jersey, U.S. Attorney Paul J. Fishman announced.

Ivan Lee, 26, was found guilty of the brandishing a firearm charge following a one-week trial before U.S. District Judge Susan D. Wigenton, who imposed the sentence today in Newark federal court. Lee had been charged by indictment with one count of theft of a motor vehicle by force, violence, and intimidation and one count of use of a firearm in furtherance of a crime of violence. Lee pleaded guilty to the carjacking count.

According to documents in this case and the evidence at trial: On Oct. 30, 2011, Lee and Hanza Darby, 25, of Newark, were in the Little Falls area when they spotted a parked 2008 BMW 335 with passengers inside. Darby and Lee  – who brandished a shotgun – approached the car and ordered the occupants out of the vehicle at gunpoint. Darby and Lee then took the car and fled the area. Law enforcement officers recovered the car in Newark on Nov. 7, 2011. Darby was standing next to it at the time.

In addition to the prison term, Judge Wigenton sentenced Lee to three years of supervised release. Darby previously pleaded guilty to carjacking and brandishing a weapon in furtherance of a crime of violence. He is awaiting sentencing.

U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; officers of the Little Falls Police Department, under the direction of Chief John Dmuchowski; the N.J. State Police, under the direction of Col. Rick Fuentes; the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes; and the Wayne Police Department, under the direction of Chief James Clarke, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Cari Fais and Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office Criminal Division in Newark.

15-057                                                            

TRENTON, N.J. – A Newark, New Jersey, man today admitted his role in an armed carjacking and subsequent involvement in a scheme to bribe a corrections officer to smuggle contraband, including marijuana and cell phones, into the Essex County Correctional Facility, a federal pretrial detention facility, U.S. Attorney Paul J. Fishman announced.

Quasim Nichols, 30, pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of committing an armed carjacking and one count of conspiring with others, including Essex County Corrections Officer Stephon Solomon, 27, of Irvington, New Jersey, to commit extortion under color of official right. Nichols is being held without bail.

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

On May 28, 2012, Nichols and three men were traveling in a gray Dodge Magnum toward Elizabeth, New Jersey. Nichols was driving the vehicle. Upon arriving in Elizabeth, the three men exited the car and approached a 2005 BMW 645. The men pointed handguns in the direction of the BMW’s passengers and ordered them out of the car. Two of the men then entered the BMW and drove it away. The third man re-entered the Dodge Magnum driven by Nichols. The third man was carrying a black Taurus Millennium semi-automatic handgun and a cell phone that had been stolen from one of the occupants of the BMW. Nichols and the third man drove away and followed the stolen BMW.

While driving away from the scene, multiple police vehicles activated their overhead lights and turned on their sirens in an effort to stop Nichols. Nichols continued to drive the Dodge Magnum at a high rate of speed from Elizabeth into Newark, drove through a red light and struck a vehicle at the intersection of Martin Luther King Boulevard and Market Street. The driver of the other vehicle suffered serious injury. Nichols and the other man then attempted to flee the area on foot.

Subsequently, while detained at the Essex County Correctional Facility on the armed carjacking charge, Nichols conspired with others, including Solomon, Dwayne Harper, 31, of Newark, and Darsell Davis, 29, of Newark, to pay cash bribes to Solomon so that he would smuggle contraband – including cell phones, tobacco, and marijuana – into the Essex County Correctional Facility. After Davis and Harper collected the contraband, Davis delivered the items and cash bribes to Solomon, who then smuggled the contraband to Nichols. Nichols ultimately sold the marijuana and cell phones to other inmates. The inmates purchasing marijuana and cell phones had their friends and family pay for the items by sending Western Union money transfers to Nichols, who enlisted Davis and others to retrieve those payments. Davis obtained at least $4,300 in Western Union payments for Nichols.

Solomon pleaded guilty Oct. 1, 2014, to conspiring to commit extortion under color of official right and is scheduled to be sentenced March 25, 2015. Darsell Davis pleaded guilty Oct. 21, 2014, to conspiring to commit extortion under color of official right and awaits sentencing. Dwayne Harper pleaded guilty Oct. 21, 2014, to conspiring to smuggle marijuana into the Essex County Correctional Facility and awaits sentencing. Davis and Solomon have been released on bail. Harper is being held without bail in New Jersey.

The armed carjacking charge carries a maximum penalty of 25 years in prison. The conspiracy charge carries a maximum penalty of 20 years in prison. Each charge also carries a maximum fine of $250,000. Nichols agreed to forfeit $4,300 consisting of his proceeds from the contraband smuggling conspiracy. His sentencing is scheduled for May 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; investigators with the Internal Affairs Division of Essex County Correctional Facility, under the leadership of Warden Roy Hendricks; the Port Authority of New York and New Jersey; the Newark Police Department, under the direction of Director Eugene Venable and Chief Anthony Campos; and the Elizabeth Police Department, under the direction of Director James Cosgrove, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Jim Donnelly and Rob Frazer of the Criminal Division, Organized Crime/Gangs Unit, and Rahul Agarwal of the U.S. Attorney’s Office, Special Prosecutions Division, in Newark.

15-056                               

Defense counsel: Michael J. Pappa Esq., Hazlet, New Jersey

TRENTON, N.J. – A Gladwyne, Pennsylvania, man today admitted using phony documents and “straw buyers” to fraudulently secure millions of dollars in discounted computer equipment from Hewlett-Packard Co. (HP) and Cisco Systems Inc. (Cisco), U.S. Attorney Paul J. Fishman announced.

Andrew Silverman, 51, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an information charging him with one count of wire fraud.

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

From January 2008 through May 2012, Silverman exploited HP and Cisco discount programs that provided reduced prices on products used locally within a certain country and were not resold. As the president and owner of DataQ Internet Equipment Corp., which sold computer hardware and software, Silverman was not eligible to receive these discounts.

Silverman admitted that he recruited business owners to pose as buyers interested in securing a large volume of computing products. He directed these straw buyers to falsely tell HP and Cisco that the procured products would be used internally by those individuals’ businesses and not resold. Once negotiations were complete and the straw buyers fraudulently secured the discounts, Silverman sent funds via international wire transfers to the straw buyers to cover the purchase cost. He then had the discounted equipment shipped to destinations other than the straw buyer’s businesses, including to New Jersey and other locations in the United States.

Silverman also admitted he sent multiple emails to HP representatives posing as an individual named “P.B,” regarding the purchase of deeply discounted HP equipment. Silverman created a company called Integrated Data Centers to conduct negotiations with an HP representative so he could fraudulently obtain discounted HP products.

The estimated combined losses to HP and Cisco are $2.5 million.

The wire fraud charge to which Silverman pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Silverman will be required to forfeit $2.5 million under terms of the plea agreement. Sentencing is scheduled for May 19, 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 inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Lakshmi Srinivasan Herman of the U.S. Attorney’s Economic Crimes Unit in Newark.

15-052                                               

Defense counsel: William Winning and Megan Scheib Esqs., Conshohocken, Pa., and Gerald Krovatin Esq., Newark

NEWARK, N.J. - A former bank assistant vice president was indicted today by a federal grand jury in connection with a scheme to embezzle more than $1 million while she worked at a bank in Fort Lee, New Jersey, U.S. Attorney Paul J. Fishman announced.

Miye Chon, a/k/a/ “Karen Chon,” 34, of Englewood Cliffs, New Jersey, was charged with one count of bank fraud and 27 counts of theft, embezzlement or misapplication of funds by a bank officer or employee.

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

Chon was employed by BankAsiana, a federally insured financial institution, as an operations officer and later as an assistant vice president and operations officer at the bank’s Fort Lee branch until the bank was acquired by Wilshire Bank in October 2013. Chon had access to customer accounts and the bank’s internal account records, computer system and vault. Over several years, Chon stole more than $1 million from BankAsiana’s customer accounts by regularly making unauthorized transfers from customer certificate of deposit (CD) accounts into BankAsiana’s vault cash account and then physically removing cash from the bank’s vault.

BankAsiana’s successor began an internal investigation after a customer found problems with the customer’s tax forms and account records. The bank discovered that Chon had accessed BankAsiana’s computer systems using her unique account access credentials on multiple occasions in order to make unauthorized transfers from customer CDs to the bank’s vault account and then removing the cash. Chon had avoided detection by making false entries in the bank’s records and by taking steps to transfer money back into customer CDs before they were set to reach maturity. She would transfer funds from newer CDs at the bank into maturing CDs that were short funds as a result of her having previously transferred money out of them.

Chon accomplished this scheme on dozens of occasions, typically taking tens of thousands of dollars at a time. One time, she converted $100,000 from a customer’s CD account.  Bank records further show that during just one week between Sept. 27, 2013 and Oct. 4, 2013, Chon’s last day working at the bank, she made multiple unauthorized transfers from customer accounts in amounts totaling approximately $1.2 million to cover losses in other customer accounts that she had previously looted as part of the scheme.  According to the successor bank’s investigation, the scheme resulted in a $1.4 million loss to the bank.

Chon faces a maximum potential sentence of 30 years in prison on each count and a fine of $1 million, or twice the gross gain or loss resulting from the scheme, as well as mandatory restitution in the full amount of the loss to the victim bank.

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 indictment.

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

The government is represented by Assistant U.S. Attorney Paul A. Murphy of the U.S. Attorney’s Office’s Economic Crimes Unit.

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Defense counsel:  Matthew Jeon Esq., Fort Lee

NEWARK – A doctor who owns three immediate care facilities in Hudson County, New Jersey, today admitted making millions of dollars’ worth of cash deposits and fraudulently transferring his residence to a family member to evade taxes, U.S. Attorney Paul J. Fishman and Tax Division Principal Deputy Assistant Attorney General Caroline D. Ciraolo announced.

Medhat El Amir of Saddle River, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to Count One of an indictment, charging him with corruptly endeavoring to impede the due administration of the Internal Revenue Code, and Count Two, tax evasion, in connection with an individual income tax return for calendar year 2007.

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

El Amir was a primary care doctor and 60 percent owner of Immediate Care P.C., which provided urgent care health services for patients at an office in North Bergen, New Jersey, and two offices in Jersey City, New Jersey.

From Feb. 11, 2005, through Dec. 31, 2010, El Amir attempted to impede the internal revenue laws in a number of ways. He admitted he fraudulently transferred his residence in Saddle River to his sister for $2.5 million to keep the property out of the reach of the IRS and the payroll taxes he owed through his former practice. El Amir also admitted cashing $7,261,083 in Immediate Care insurance company checks at a check cashing facility, depositing the majority of that income into a number of bank accounts to which he had access and using a portion of the money for personal expenses.

El Amir admitted he failed to report taxable income of $2,087,048 for the years 2007-2010, resulting in a $502,160 tax loss to the United States.

Despite earning a significant income through Immediate Care, El Amir did not file personal income tax returns, Forms 1040, for calendar years 2007, 2009 and 2010. While El Amir did file a personal income tax return for calendar year 2008, it substantially under-reported the income El Amir received from Immediate Care and claimed interest deductions to which he was not entitled. El Amir also caused to be sent to the IRS correspondence that under-reported the amount of income he and his wife received from Immediate Care in calendar year 2008.

The count of corruptly endeavoring to impede the due administration of the Internal Revenue Code carries a maximum potential penalty of three years in prison and a $250,000 fine. The count of tax evasion carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 10, 2015.

U.S. Attorney Fishman and Principal Deputy Assistant Attorney General Ciraolo credited special agents of the IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, and the 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 investigation leading to today’s guilty plea.

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.

The government is represented by Assistant U.S. Attorney Deborah J. Gannett of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark and Trial Attorney Shawn T. Noud of the Justice Department’s Tax Division.

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Defense counsel: Samuel R. DeLuca Esq., Jersey City, N.J.

El Amir, Medhat Indictment

South Side Cartel Leader Charged with Six Murders in Racketeering Indictment

NEWARK, N.J. – U.S. Attorney General Eric Holder has authorized and directed that the death penalty be sought against the leader of a violent Newark street gang charged with six murders, U.S. Attorney Paul J. Fishman announced today.

Formal notice of intent to seek the death penalty was presented in court today to Farad Roland, 30, leader of the South Side Cartel gang in Newark. Roland and two-codefendants were previously arraigned on a 24-count superseding indictment charging them with violations of the Racketeer Influenced Corrupt Organizations Act (RICO), murder, kidnapping, robbery, carjacking, drug conspiracy and other violent acts in aid of racketeering and related charges.

Five of the six murders charged in the superseding indictment are death-eligible offenses. Attorney General Holder authorized the U.S. Attorney to seek the death penalty on Jan.12, 2015. The criminal case against Roland and his codefendants is pending before U.S. District Judge Esther Salas, who has scheduled the trial for Jan. 11, 2016. The formal notice was given to Roland today before Judge Salas in Newark federal court.

If convicted of any of the death penalty eligible murders, a separate penalty phase would follow. If the jury found that the death penalty should not be imposed, Farad Roland would be sentenced to life without the possibility of parole. The case would be the second capital case tried in the history of the District of New Jersey, and the first since 2007.

Attorney General Holder also authorized and directed the U.S. Attorney not to seek the death penalty against Roland’s codefendants, Mark Williams, 32, and Malik Lowery, 33, who are each charged with one death penalty eligible murder. The defendants were indicted by a federal grand jury and arraigned on Dec. 20, 2012. They are detained without bail.

According to documents filed in this case:

The South Side Cartel, a sub-set of the Bloods street gang, operated primarily on Hawthorne Avenue in Newark since 2002. Originally a neighborhood-based gang whose main activities were selling drugs and committing violent acts to aid the drug trafficking business, many of the gang's members were officially brought into the Bloods gang in 2002 and 2003. As early as 2005, the gang was officially named “The South Side Cartel.” The gang’s center of activities were apartments located inside buildings dubbed “the Twin Towers,” located at 496-500 Hawthorne Avenue, the location of repeated narcotics and gun arrests by local law enforcement between 2002 and 2010. Many of the South Side Cartel members had tattoos showing these buildings and the logo of “SSC” representing the gang’s initials.

At its peak, the South Side Cartel had about 20 members or associates, many of whom have since been killed in gang-related murders or who are serving prison sentences in state and federal prisons for gang-related crimes. These defendants represent the last of the leadership of the gang. Co-founded by Amin and Farad Roland, between 2003 and 2010 the South Side Cartel was generally known among law enforcement and the FBI as the most violent street gang operating in Newark, committing numerous murders, shootings, robberies and other violent acts in furtherance of the enterprise.

The superseding indictment charges the defendants with their participation in a host of racketeering acts to further the South Side Cartel's goals, including: 1) the Dec. 4, 2003, murder of a rival gang member in a drive-by shooting; 2) the Feb. 23, 2005, murder of a fellow South Side Cartel member who was about to be arrested, in order to keep him from cooperating with law enforcement and implicating Farad Roland in a robbery/murder which took place a few days earlier; 3) the Oct. 20, 2007, murder of a fellow South Side Cartel member who had fallen into disfavor with the gang; and 4) the retaliation murders of two people on March 27, 2008, outside the Oasis Bar located on Lyons Avenue in Newark All the victims were shot to death.

The superseding indictment also charges the defendants with carjacking, assault with dangerous weapons in furtherance of racketeering for shootings of rival gang members and a conspiracy to distribute heroin and crack cocaine, among other charges.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Eric Welling; the Newark Police Department, under the direction of Police Director Eugene Venable and Police Chief Anthony Campos; and Acting Essex County Prosecutor Carolyn Murray, with the investigation leading to the charges in this case.

The government is represented by Assistant U.S. Attorneys Robert Frazer and Andrew Bruck of the Organized Crime/Gangs Unit in Newark.

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Defense counsel: Farad Roland: Donna Newman, Esq. and Richard Jasper Esq.
Mark Williams: James Patton Esq., and Carl Herman Esq.
Malik Lowery: John Azzarello Esq. and Anthony Ricco, Esq.

TRENTON, N.J. – The owners of a tax preparation business that filed fraudulent tax returns on behalf of inmates at various New Jersey prisons were convicted at trial today of conspiracy, mail fraud and making false claims to the United States for payment of fraudulent tax refunds, U.S. Attorney Paul J. Fishman and Principal Deputy Assistant Attorney General Caroline D. Ciraolo announced.    

Kamal J. James, aka “Bro Messiah Aziz El,” of Seaford, Delaware, and Crystal G. Hawkins, aka “Sis. Crystal Gabri El,” of Laurel, Delaware, had each been charged in a superseding indictment with one count of conspiracy, 16 counts of false claims and three counts of mail fraud. They were convicted on all counts following a one-week trial before U.S. District Judge Peter G. Sheridan in Trenton federal court. The jury deliberated one hour before returning the guilty verdicts.

According to the superseding indictment and the evidence at trial:

Between October 2011 and October 2013, defendants James and Hawkins operated Release Refunds, a purported tax preparation business – previously based in Brick, New Jersey, and in Seaford, Delaware – through which they solicited current and former New Jersey prison inmates as clients and then filed fraudulent tax returns on their behalf. The company is no longer in business.

James and Hawkins sent Release Refunds “promotional” flyers to inmates at various New Jersey prisons and halfway houses offering tax return preparation services. The pair asked inmates interested in Release Refunds’ services to provide basic identification information and to sign income tax returns and other IRS documents, but not to include any information about their income or withholdings. James and Hawkins then filled in the missing income information on the return forms, fabricating the inmates’ earnings to trigger fraudulent and inflated refunds.

During the course of the investigation, an undercover IRS-Criminal Investigation agent posing as an inmate in a New Jersey prison submitted a completed Release Refunds form and sent it to James and Hawkins. They then sent the “inmate” blank income tax forms and other IRS documents and instructions to sign the documents. James and Hawkins did not request any financial information from the undercover agent before preparing three fraudulent tax returns – including false income information that James and Hawkins provided – to be filed on behalf of the agent for tax years 2010 through 2012. The fraudulent returns resulted in several thousand dollars in refunds and a $1,485 fee for the defendants.

The conspiracy count carries a maximum potential penalty of 10 years in prison. The fraudulent claims counts each carry a maximum potential penalty of five years in prison and the mail fraud counts each carry a maximum potential penalty of 20 years in prison. The defendants also face a fine of $250,000 or twice the amount of the gain or loss from the offense for each count of conviction. Sentencing is scheduled for May 11, 2015.

U.S. Attorney Fishman and Principal Deputy Assistant Attorney General Ciraolo credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s charges. They also thanked the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates; and the N.J. Department of Corrections, under the direction of Commissioner Gary M. Lanigan, for their roles in the case.

The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Trenton and Trial Attorney Thomas Jaworski of the Justice Department’s Tax Division.

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Defense counsel: James: Pro se; (Bruce Throckmorton Esq., Trenton, standby counsel)

Hawkins: Pro se; (Andrea Bergman Esq. Assistant Federal Public Defender, Trenton, standby counsel)

NEWARK, N.J. – A Northampton County, Pennsylvania, man was arrested at his home this morning for allegedly downloading multiple images and videos of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Derrick Baer, 32, of Bath, Pennsylvania, and formerly of Pohatcong, New Jersey, is charged by complaint with one count of receiving child pornography and one count of possessing child pornography. He is scheduled to make his initial court appearance later today before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

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

In May 2010, in connection with an investigation into a suspicious death at Baer’s residence, law enforcement obtained Baer’s consent to seize computer equipment in his residence. A subsequent forensic review of that equipment made pursuant to a search warrant revealed 368 images and 29 video files of child pornography. Law enforcement later determined that Baer used a file sharing program to download multiple files in January and February 2009.    

The receipt of child pornography count with which Baer is charged is punishable by a maximum potential penalty of 20 years in prison, a minimum penalty of five years in prison, and a fine of $250,000.  The possession count is punishable by a maximum potential sentence of 10 years in prison.

U.S. Attorney Fishman credited special agents of the FBI’s Child Exploitation Task Force, under the direction of Acting Special Agent in Charge Eric Welling in Newark; the Pohatcong Township Police Department, under the direction of Chief Jeffrey S. Greenemeir; and the Warren County Prosecutor’s Office, under the direction of Prosecutor Richard T. Burke, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney David W. Feder of the U.S. Attorney’s Office Criminal Division in Newark.

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

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NEWARK, N.J. – Two Bergen County, New Jersey, men and a New York man today admitted their roles in a scheme to transport more than 20 kilograms of cocaine from California to New Jersey, U.S. Attorney Paul J. Fishman announced.

Melvin Feliz, 48, of Englewood Cliffs, New Jersey; Irving Olivero-Pena, 42, of Edgewater, New Jersey; and Robert Crawford, 39, of Long Island City, New York; each pleaded guilty before U.S. District Judge Kevin McNulty to Count One of an indictment charging them with conspiracy to possess with the intent to distribute five kilograms or more of cocaine. Feliz, Olivero-Pena, and Crawford were arrested on March 11, 2014.

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

Feliz, Olivero-Pena and Crawford admitted that from January 2011 through March 2014, they conspired to purchase narcotics for distribution in New Jersey. On Oct. 22, 2012, they met a courier in Bergen County. They admitted that they gave the courier $549,950 in currency to transport to California via tractor trailer, where it would be used to purchase approximately 20 kilograms of cocaine. Afterwards, the courier would transport the cocaine to New Jersey for distribution. The currency was ultimately seized by law enforcement officers in California.

The conspiracy charge to which Feliz, Olivero-Pena and Crawford pleaded guilty carries a maximum potential penalty of life in prison and a $10 million fine. Sentencing for all three defendants is scheduled for May 6, 2015.

U.S. Attorney Fishman credited special agents from the Drug Enforcement Administration (DEA), Newark Division, under direction of Special Agent in Charge Carl J. Kotowski; and special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, New Jersey, with the investigation leading to today’s guilty pleas.

The government is represented by Assistant U.S. Attorney Brian L. Urbano of the U.S. Attorney’s Office Criminal Division and Assistant U.S. Attorney David L. Foster of the U.S. Attorney’s Office, Special Prosecution’s Division in Newark.

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Defense counsel:

Melvin Feliz: Patrick Joyce Esq., New York
Irving Olivero-Pena: David Touger Esq., New York
Robert Crawford: Rubin Sinins Esq., Springfield, New Jersey

CAMDEN, N.J. - A Philadelphia, Pennsylvania, man admitted robbing five banks in New Jersey and Pennsylvania over four months, U.S. Attorney Paul J. Fishman announced today.

Nathaniel Stroud, 34, 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 in connection with robbing a Roma Bank in Delran, New Jersey, on Nov. 8, 2013, and robbing a 1st Constitution Bank in Hightstown, New Jersey, on Jan. 9, 2014.  Stroud also admitted robbing a PNC Bank and a TD Bank in Philadelphia and a TD Bank in Willingboro, New Jersey.

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

Between September 2013 and January 2014, Stroud robbed the five banks by presenting a demand note to the bank tellers, in which he stated that he had a gun.

The two counts of bank robbery charged in the information are each punishable by a maximum of 20 years in prison and a $250,000 fine.  Sentencing is currently scheduled for May 14, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Eric Welling, 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 Prosecutor Joseph L. Bocchini, 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.

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

CAMDEN, N.J. - An Atlantic City, New Jersey, man was sentenced today to 84 months in prison for engaging in a conspiracy to distribute heroin with Mykal Derry, a leader of the “Dirty Block” criminal street gang that allegedly used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City.

Raymond Mack, a/k/a “Bread,” 21, of Atlantic City, N.J., previously pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court 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 and other cases and statements made in court: Mack was arrested on March 26, 2013. He acted as a heroin dealer on behalf of Mykal Derry, 34, of Atlantic City, helping Dirty Block distribute heroin in and around the public housing apartment complexes of Stanley Holmes, Carver Hall, Schoolhouse, Adams Court and Cedar Court in Atlantic City.

In addition to the prison term, Judge Irenas sentenced Mack to serve eight years of supervised release.
Mack’s sentencing follows the sentencings last week of two conspirators: Kasan Hayes, 28, was sentenced to 108 months in prison and eight years of supervised release; and Dwayne Townsend, 21, was sentenced to 60 months in prison and eight years of supervised release. Both Hayes and Townsend previously pleaded guilty before Judge Irenas to charges of conspiring to distribute, and to possess with intent to distribute, heroin, within 1,000 feet of a public housing complex.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Eric Welling; 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 sentencing.

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 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.

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Defense counsel:  Paul Hetznecker Esq., Philadelphia, P.A.

Thirty-five Defendants – Including 24 Doctors – Have Pleaded Guilty to Roles in Massive Scheme

NEWARK, N.J. – A Middlesex County doctor with practices in Jersey City, New Jersey, today admitted 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.

Anthony DelPiano, 53, of Monmouth Junction, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes. 

Including DelPiano, 35 people – 24 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 to date recovered more than $10.5 million through forfeiture.

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

DelPiano admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $2,300 per month. DelPiano’s referrals generated at least $1,752,603.24 in lab business for BLS.

On April 9, 2013, federal agents arrested David Nicoll, 40, of Mountain Lakes, New Jersey, Scott Nicoll, 33, of Wayne, New Jersey, a senior BLS employee and David Nicoll’s brother, and Craig Nordman, 35, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme

The bribery count to which DelPiano pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for May 12, 2015. As part of his guilty plea, DelPiano must forfeit $204,475, representing the total bribe monies received from BLS.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Eric Welling; 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 Acting 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 leading to today’s guilty plea.

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

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Defense counsel: Wick Sollers Esq., Washington, D.C.

NEWARK, N.J. - A New Milford, New Jersey, man today admitted his role in conspiring to sell seven firearms believed to have belonged to the family of Saddam Hussein, U.S. Attorney Paul J. Fishman announced.

Carlos Manuel Quirola, a/k/a “Carlos Quirola-Ordonez,” a/k/a “Manny, 58, pleaded guilty before U.S. District Judge Katharine S. Hayden to Count One of an indictment charging him with conspiracy to transport stolen firearms.

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

In April 2012, law enforcement received information that valuable firearms allegedly belonging to members of the family of the late Iraqi president Saddam Hussein were available for sale. The weapons were believed to be kept in Florida, and Quirola and others attempted to find a buyer for them in New Jersey. The firearms had been appraised at $250,000 to $350,000.  Seven firearms were shipped to New Jersey for viewing by potential buyers.

Federal law enforcement officers seized the following firearms in the course of the investigation:

(1)        One Coonan Arms Inc., .357 semi-automatic pistol, nickel finish, made in St. Paul, Minn., with gold inlay and a medallion “QS” on left side grip (believed to be the initials of Qusay Saddam Hussein al-Tikriti, the second son of former Iraqi President Saddam Hussein);

(2)        One Korth, .357 magnum revolver (six shot) stamped “Made in W. Germany Waffenfabrik Koth Ratzeburg/LBG,” with gold inlay, black finish, wood grips, which displays a drawing of a wild boar;

(3)        One Korth, .357 magnum, revolver (six shot) stamped “Made in W. Germany Waffenfabrik Koth Ratzeburg/LBG,” with gold inlay, black finish, wood grips, which displays a drawing of a moose;

(4)        One Chinese State Factories type 64 pistol, .32 caliber semi-auto pistol, black finish, with Yemen flag icon on both sides of grip and Arabic writing on the slide;     

(5)        Two Cosmi, 12 gauge shotguns, break top, single barrel;    

(6)        One Llama Semiautomatic .45 ACP pistol with gold leaf and gold inlays, hand engraved, bearing the initials “Q.S.”

The count to which the defendant pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000.  Sentencing is scheduled for June 1, 2015.

Two other individuals, Karlo Sauer and Howard Blumenthal, have pleaded guilty to their roles in this conspiracy. Blumenthal has been sentenced, and Sauer is awaiting sentencing.

Another individual, David Ryan is charged by indictment, and a trial date is scheduled for May 11, 2015. The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge George P. Belsky; and Immigration and Customs Enforcement-Homeland Securities Investigation, under the direction of Acting Special Agent in Charge John P. Woods, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Joyce M. Malliet of the National Security Unit in Newark.

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Defense Counsel: Miles Feinstein Esq., Clifton, N.J.

Quirola, Carlos Indictment

CAMDEN, N.J. – A Cumberland County, New Jersey, married couple today admitted planning to destroy a historic diner they owned in Bridgeton, New Jersey, U.S. Attorney Paul J. Fishman announced.

Andrew Webster, 49, and Brenda Webster, 44, both of Cedarville, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to separate informations charging them each with one count of conspiracy to commit arson.

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

In March 2012, Andrew and Brenda Webster purchased and operated Angie’s Bridgeton Grill, a nearly 75-year old diner that was listed on the New Jersey and National Register of Historic Places in 2012.

Soon after they began to operate the diner, the Websters experienced several months of poor financial performance. During their plea hearings, Andrew and Brenda Webster admitted that they agreed to destroy the diner by fire. They also admitted that on Oct. 23, 2012, they traveled to the diner in Andrew’s truck.

According to the charges, in the early morning hours of Oct. 24, 2012, the Websters entered the diner, collected combustible materials (including newspapers, paper menus, and other light-weight combustible materials), doused them with gasoline, and ignited them with an open flame. Brenda Webster suffered burns to her body when gasoline vapors inside the diner ignited. The two quickly exited and within a short period of time, the fire destroyed the diner.

Sentencing for both Andrew Webster and Brenda Webster is set for May 14, 2015.  Both were released on bail subject to a $50,000 unsecured bond and travel restrictions.

U.S. Attorney Fishman credited the Bureau of Alcohol Tobacco Firearms and Explosives, under the direction of Special Agent in Charge George Belsky; the Cumberland County Prosecutors Office, under the direction of Prosecutor Jennifer Webb-McRae; and the Bridgeton Police Department, under the direction of Chief Mark Ott, for the investigation leading to today’s guilty pleas.

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

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Defense counsel: Andrew Webster: Richard Coughlin Esq., Assistant Federal Public Defender, Camden
Brenda Webster: Joseph Hoffman III Esq., Turnersville, New Jersey.

NEWARK, N.J. – A Middlesex County, New Jersey, man was sentenced today to 71 months in prison for robbing a TD Bank in Saddle Brook, New Jersey, U.S. Attorney Paul J. Fishman announced.

Jorge Rodriguez, 47, of South River, New Jersey, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with one count of bank robbery. Judge Martini imposed the sentenced today in Newark federal court.

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

Rodriguez admitted using a BB air pistol to rob a TD Bank in Saddle Brook on April 19, 2013.  Rodriguez entered the bank wearing a disguise, which included a hat with a dreadlocks wig attached to it. During the robbery, Rodriguez brandished the BB air pistol, handed a bag to a bank teller and said, “Give me the money or I’ll shoot. You have two seconds.” The teller complied and Rodriguez then fled the bank with the bag of money, which also included a dye pack.  Rodriguez was apprehended shortly after the robbery after the dye pack exploded.

In addition to the prison term, Judge Martini sentenced Rodriguez to three years of supervised release and fined $75.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Eric Welling in Newark, along with the Saddle Brook Police Department and the Bergen County Prosecutor’s Office, for the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Josh Hafetz and David M. Eskew of the Criminal Division of U.S. Attorney’s Office in Newark.

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Defense counsel: Patrick McMahon Esq., Assistant Federal Public Defender, Newark

Also Pleads Guilty to Firearms Offense

CAMDEN, N.J. - An Atlantic City, New Jersey, man today admitted engaging in a conspiracy to distribute heroin with Mykal Derry, a leader of the “Dirty Block” criminal street gang that allegedly used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City.

Kamal Allen, a/k/a “Geez,” a/k/a “Maly Geez,” 27, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court 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, 1 kilogram or more of heroin, and one count of possessing a firearm and ammunition while being a previously convicted felon.

According to documents filed in this and other cases and statements made in court:   Allen acted as a distributor and enforcer on behalf of Derry, 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. Allen was arrested on March 26, 2013. Allen said in court that he and others travelled with Derry to a shooting range in Lakewood, New Jersey, on Jan. 20, 2013, where Allen – a previously convicted felon – used, possessed, and discharged a firearm. Allen and other members of the group also participated in a violent altercation with rival drug traffickers at an Atlantic City casino in December 2012.

The charge of drug conspiracy in a protected zone, to which Allen pleaded guilty, carries a minimum penalty of 10 years in prison, a maximum penalty of life in prison, and a maximum potential fine of up to $20 million.  Sentencing is scheduled for May 12, 2015.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Eric Welling; 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.

The government is represented by Assistant U.S. Attorneys Patrick C. Askin and Justin C. Danilewitz, and Special Assistant U.S. Attorney Edmond Malqui-Burgos of the Atlantic County Prosecutor’s Office.
Defense counsel:  Jerome A. Ballarotto Esq., Trenton, N.J.

15-042                                                   

TRENTON, N.J. – A licensed pharmacist was sentenced today to 78 months in prison for attempting to weaponize the lethal toxins ricin and abrin and for possessing a prohibited flask intending to use it to manufacture illegal narcotics, New Jersey U.S. Attorney Paul J. Fishman announced.

Jordan S. Gonzalez, 34, of New York, formerly of Jersey City, New Jersey, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with the offenses.

“The sentence imposed today on Jordan Gonzalez is an appropriate response to his efforts to manufacture and deploy toxins as deadly weapons,” U.S. Attorney Fishman said. “He was preparing for a violent confrontation that fortunately never occurred because the excellent response by our law enforcement partners stopped him before anyone was hurt.”

“Jordan Gonzalez had in his possession the ingredients and equipment necessary to manufacture dangerous biological toxins and explosives, as well as, a cache of weapons and ammunition,” FBI Acting Special Agent in Charge Eric Welling said. “Due to the tireless efforts of the FBI Joint Terrorism Task Force and the Drug Enforcement Administration, the imminent threat posed by Gonzalez did not become a reality. Prevention is the FBI’s priority, so I would like to remind the citizens of New Jersey to remain vigilant and contact the FBI or their nearest law enforcement department if they see or hear anything suspicious.”

“Mr. Gonzalez’ sentencing sends a clear message that attempting to produce weapons of mass destruction cannot be tolerated,” Carl J. Kotowski, Special Agent in Charge of the Drug Enforcement Administration’s New Jersey Division, said. “The dedicated men and women of DEA will continue to work tirelessly to keep criminals such as Mr. Gonzalez from being a threat to society.”

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

From Sept. 18, 2011, through March 19, 2013, Gonzalez purchased thousands of seeds containing ricin and abrin, and materials to extract and administer those toxins to others, including filtering equipment, respirators and glass vials. Even small doses of ricin and abrin are lethal to humans if ingested, inhaled or injected – causing death within 36 to 72 hours from the time of exposure.  There are no known antidotes.

Gonzalez also obtained conventional weapons, such as crossbows, spraying devices, and other items to deliver the toxins.  He admitted he attempted to make these toxins in preparation for future confrontations with others. Gonzalez also obtained firearms, body armor, and precursor materials for the manufacture of military-grade explosives and improvised explosive devices.  Gonzalez made the purchases through an online marketplace through which third-party vendors in the United States and abroad sell products to members of the public. Gonzalez learned how to extract toxins from the seeds and about methods to administer them to other persons from manuals he acquired.  He also acquired manuals for making improvised explosive devices and synthesizing explosive compounds.

On Nov. 8, 2013, while living in Manhattan, Gonzalez purchased one kilogram of sodium azide, a toxic, gas-forming compound that can explode at high temperatures and is lethal if ingested or absorbed through the skin. Law enforcement officers intercepted the delivery during the investigation.

On Nov. 14, 2013, Gonzalez was arrested in Jersey City and search warrants were executed at three locations he used: apartments in Manhattan and Jersey City and a storage unit in Jersey City. Collectively, material collected through the searches included thousands of seeds containing ricin and abrin; explosive precursor chemicals; manuals related to toxins, explosives and improvised explosive devices; approximately 1,000 rounds of ammunition, handguns, components for assault rifles, and high-capacity magazines; a bulletproof vest; and books and documents related to the collapse of social order and techniques for surviving in a lawless environment.

Gonzalez also acquired manuals for synthesizing controlled substances, including methylenedioxyamphetamine (MDA) and methylenedioxymethamphetamine (MDMA), also known as “ecstasy.” He bought and had delivered to the Jersey City apartment a three-neck round-bottom flask, gel capsules and an encapsulating machine, as well as precursor chemicals used in the manufacture of MDA and MDMA. Possession of that type of flask is prohibited if intended for use in the manufacturing of controlled substances. 

In addition to the prison term, Judge Cooper sentenced Gonzalez to five years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Welling in Newark, and the DEA, under the direction of Special Agent in Charge Kotowski in New Jersey, with the investigation leading to today’s sentencing.  He also thanked members of FBI Newark’s Joint Terrorism Task Force; FBI’s New York Office and Weapons of Mass Destruction Directorate and Laboratory Division; DEA’s New York Division; and the New Jersey Office of Homeland Security and Preparedness for their work on the case; as well as the police and fire departments of Jersey City and the City of New York, as well as the New Jersey State Police for their assistance.
 
The government is represented by Assistant United States Attorneys L. Judson Welle and Francisco J. Navarro of the U.S. Attorney’s Office National Security Unit in Newark.  Valuable support was provided by attorneys of the Department of Justice’s National Security Division – Counterterrorism Section.

15-040                                                        

Defense counsel: Steven Ross Esq., New York

Gonzalez, Jordan Sentencing Slides

A licensed pharmacist was sentenced today to 78 months in prison for attempting to weaponize the lethal toxins ricin and abrin and for possessing a prohibited flask intending to use it to manufacture illegal narcotics, U.S. Attorney Paul J. Fishman for the District of New Jersey announced.

Jordan Gonzalez, 34, of New York, formerly of Jersey City, New Jersey, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with the offenses.

“The sentence imposed today on Jordan Gonzalez is an appropriate response to his efforts to manufacture and deploy toxins as deadly weapons,” said U.S. Attorney Fishman.  “He was preparing for a violent confrontation that fortunately never occurred because the excellent response by our law enforcement partners stopped him before anyone was hurt.”

“Jordan Gonzalez had in his possession the ingredients and equipment necessary to manufacture dangerous biological toxins and explosives, as well as, a cache of weapons and ammunition,” FBI Acting Special Agent in Charge Eric Welling said. “Due to the tireless efforts of the FBI Joint Terrorism Task Force and the Drug Enforcement Administration, the imminent threat posed by Gonzalez did not become a reality. Prevention is the FBI’s priority, so I would like to remind the citizens of New Jersey to remain vigilant and contact the FBI or their nearest law enforcement department if they see or hear anything suspicious.”

“Mr. Gonzalez’ sentencing sends a clear message that attempting to produce weapons of mass destruction cannot be tolerated,” said Special Agent in Charge Carl J. Kotowski of the Drug Enforcement Administration’s (DEA) New Jersey Division.  “The dedicated men and women of DEA will continue to work tirelessly to keep criminals such as Mr. Gonzalez from being a threat to society.”

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

From Sept. 18, 2011 through March 19, 2013, Gonzalez purchased thousands of seeds containing ricin and abrin and materials to extract and administer those toxins to others, including filtering equipment, respirators and glass vials.  Even small doses of ricin and abrin are lethal to humans if ingested, inhaled or injected – causing death within 36 to 72 hours from the time of exposure.  There are no known antidotes.

Gonzalez also obtained conventional weapons, such as crossbows, spraying devices and other items to deliver the toxins.  He admitted he attempted to make these toxins in preparation for future confrontations with others.  Gonzalez also obtained firearms, body armor and precursor materials for the manufacture of military-grade explosives and improvised explosive devices.  Gonzalez made the purchases through an online marketplace through which third-party vendors in the United States and abroad sell products to members of the public.  Gonzalez learned how to extract toxins from the seeds and about methods to administer them to other persons from manuals he acquired.  He also acquired manuals for making improvised explosive devices and synthesizing explosive compounds.

On Nov. 8, 2013, while living in Manhattan, Gonzalez purchased one kilogram of sodium azide, a toxic, gas-forming compound that can explode at high temperatures and is lethal if ingested or absorbed through the skin.  Law enforcement officers intercepted the delivery during the investigation.

On Nov. 14, 2013, Gonzalez was arrested in Jersey City and search warrants were executed at three locations he used: apartments in Manhattan, Jersey City and a storage unit in Jersey City.  Collectively, material collected through the searches included thousands of seeds containing ricin and abrin, explosive precursor chemicals, manuals related to toxins, explosives and improvised explosive devices, approximately 1,000 rounds of ammunition, handguns, components for assault rifles, high-capacity magazines, a bulletproof vest, and books and documents related to the collapse of social order and techniques for surviving in a lawless environment.

Gonzalez also acquired manuals for synthesizing controlled substances, including methylenedioxyamphetamine (MDA) and methylenedioxymethamphetamine (MDMA), aka ecstasy.  He bought and had delivered to the Jersey City apartment a three-neck round-bottom flask, gel capsules and an encapsulating machine, as well as precursor chemicals used in the manufacture of MDA and MDMA.  Possession of that type of flask is prohibited if intended for use in the manufacturing of controlled substances.

In addition to the prison term, U.S. District Judge Cooper sentenced Gonzalez to five years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI under the direction of Special Agent in Charge Ford in Newark, New Jersey, and the DEA under the direction of Special Agent in Charge Kotowski in New Jersey with the investigation leading to today’s sentencing.  He also thanked members of FBI Newark’s Joint Terrorism Task Force, FBI’s New York Office and Weapons of Mass Destruction Directorate Laboratory Division, DEA’s New York Division, the New Jersey Office of Homeland Security and Preparedness for their work on the case, the police and fire departments of Jersey City and the city of New York and the New Jersey State Police for their assistance. 

The government is represented by Assistant U.S. Attorneys L. Judson Welle and Francisco J. Navarro of the U.S. Attorney’s Office National Security Unit in Newark.  Valuable support was provided by attorneys of the Department of Justice’s National Security Division – Counterterrorism Section.

TRENTON, N.J. - A man who robbed 11 stores in Newark, Harrison and Jersey City between September 2012 and April 2013 was sentenced today to 240 months in prison, U.S. Attorney Paul J. Fishman announced.

Christopher Mojica, 24, previously pleaded guilty before U.S. District Judge Joel A. Pisano to an information charging him with one count of Hobbs Act conspiracy, one count of Hobbs Act robbery and one count of discharging a firearm in furtherance of a crime of violence. Judge Pisano imposed the sentence today in Trenton federal court.

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

Mojica conspired with others to rob commercial establishments as follows:

New Barbershop

Newark

September 14, 2012

Newark

September 2012

Amcare Pharmacy

Newark

November 13, 2012

Summer Pharmacy

Newark

December 11, 2012

Community Health Pharmacy

Newark

January 19, 2013

Delson Jewelry

Newark

February 8, 2013

Pharmacy Plus

Harrison

February 21, 2013

Forest Hill Pharmacy

Newark

April 4, 2013

Montgomery Pharmacy

Jersey City

April 15, 2013

Harris Pharmacy

Newark

April 16, 2013

Delta Gas Station

Newark

April 19, 2013

Mojica and his conspirators robbed each of these establishments at gunpoint, stealing cash, oxycodone pills, jewelry and other items. During the Delta Gas Station robbery on April 19, 2013, Mojica robbed the gas station attendant at gunpoint while a conspirator served as the “lookout.” Mojica fired a .45 caliber semi-automatic handgun as he fled the scene.

In addition to the prison term, Judge Pisano sentenced Mojica to five years of supervised release. Restitution will be determined at a later date.

U.S. Attorney Fishman credited special agents with the FBI, under the direction of FBI Acting Special Agent in Charge Eric Welling in Newark, with the investigation leading to today’s sentencing. He also thanked the Newark, Harrison and Jersey City police departments, along with the Essex County and Hudson County prosecutor’s offices for their work on this case.

The government is represented by Assistant U.S. Attorney Dara Aquila Govan of the Organized Crime/Gangs Unit in Newark.

15-039                                                           

Defense counsel: Paulette Pitt Esq., Woodbridge, New Jersey

NEWARK, N.J. – A native of Romania who was arrested in Sweden and extradited to the United States admitted today to directing a large-scale scheme that stole bank account information through a process commonly referred to as “ATM skimming,” in which conspirators secretly installed card-reading devices on ATMs throughout New Jersey, New York, Connecticut, Florida, and elsewhere, U.S. Attorney Paul J. Fishman announced.

Marius Vintila, a/k/a “Dan Girneata,” 31, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to Count One of a superseding indictment, conspiracy to commit bank fraud, and Count Two, aggravated identity theft.

In July 2013, as federal agents in New Jersey arrested various members of his large-scale ATM skimming scheme, Vintila fled the United States. On Sept. 24, 2013, he was apprehended in Sweden and subsequently extradited to the United States. Vintila has been held without bail since his arrival in the United States in February 2014.  

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

Vintila was the ringleader of an extensive ATM skimming scheme that targeted thousands of bank customers and defrauded Citibank, TD Bank, Wells Fargo, and multiple other financial institutions out of at least $5 million.

Vintila and his conspirators constructed sophisticated card-reader devices capable of reading and storing customers’ bank account information as the customers performed routine bank transactions at ATMs. Vintila and his conspirators also concealed pinhole cameras in panels designed to match existing ATM components. Vintila then taught and directed several conspirators to install the devices on ATMs. Once installed, the card-reader devices secretly read identity and account information contained on the magnetic strip of customer ATM cards. The pinhole cameras recorded customer keystrokes as they entered their personal identification numbers.

After the account information was stolen, Vintila and his conspirators used the stolen data to create thousands of fraudulent ATM cards, which they used to withdraw millions of dollars from customers’ bank accounts. Vintila also used an alias, “Dan Girneata,” to open bank accounts, rent vehicles and rent multiple self-storage units where he stored skimming devices, pinhole cameras, super glue, tape, SD cards, batteries, computers, molds, fraudulent ATM cards, and cash proceeds. Vintila also provided other conspirators with fake passports and aliases to use in furtherance of the scheme.

Vintila’s ATM skimming operation is one of the largest ever uncovered by law enforcement. To date, 16 individuals, including Vintila, have been charged. Eleven of those 16 have pleaded guilty. Bogdan Radu, 30, who was charged separately, helped design and construct the ATM skimming devices used during a large portion of the scheme. Radu pleaded guilty to bank fraud conspiracy and aggravated identity theft in February 2014. Enes Causevic, 24, Marius Cotiga, 35, Constantin Ginga, 53, Dezso Gyapias, 29, Ioan Leusca, 30, Constantin Pendus, 30, and Emil Revesz, 30, all charged separately from Vintila, participated in Vintila’s ATM skimming scheme by installing or removing the devices, and by subsequently using the fraudulent ATM cards to withdraw cash from compromised bank accounts. Florin Apetrei, 18, Luis Franco, 23, and Mirel Hadzalic, 24, participated in the scheme by using the fraudulent ATM cards to withdraw cash. Causevic, Cotiga, Ginga, Gyapias, Leusca and Revesz all pleaded guilty to bank fraud conspiracy and aggravated identity theft charges. Apetrei, Cotiga, Pendus, Franco and Hadzalic pleaded guilty to bank fraud conspiracy. For their roles in the scheme, Judge Martini sentenced Ginga, Gyapias and Leusca each to 57 months’ imprisonment. Franco and Pendus each received sentences of 33 months in prison. Hadzalic and Apetrei each received 34 and 24 months in prison, respectively. Causevic, Cotiga, Radu and Revesz are still await sentencing. 

Dinu Horvat, 28, who was charged as a co-defendant along with Vintila, has pleaded not guilty, and is scheduled to stand trial in March 2015. Charges remain pending against Alin Dumitru Carabus, 40, Ionut Vasile Ciurba-Stana, a/k/a “Ciorba,” 28, and Robert Eduard Mate, a/k/a “Chioru,” 29, three additional members of the conspiracy who were charged by indictment on April 16, 2014. Carabus, Ciurba-Stana, and Mate were all apprehended in Spain, and requests for extradition to the United States are pending.      

The bank fraud conspiracy charge to which Vintila pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine. The aggravated identity theft charge carries a mandatory, consecutive penalty of two years in prison and a maximum $250,000 fine. Vintila is scheduled for sentencing on May 5, 2015.

U.S. Attorney Fishman credited special agents of the U.S. Secret Service, under the direction of Acting Special Agent in Charge Carl Agnelli, along with special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge John P. Woods, with the investigation leading to today’s guilty plea.

The charges against Horvat, Carabus, Ciurba-Stana and Mate are merely accusations, and the defendants are considered innocent unless and until proven guilty.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal of the Special Prosecutions Division and David M. Eskew of the Criminal Division, Economic Crimes Unit, in Newark.

15-037                          

Defense Counsel: Brian Neary Esq., Hackensack, New Jersey

Vintila, Marius Superseding Indictment

NEWARK, N.J. – An internist with a practice in Montclair, New Jersey, was sentenced today to 16 months in prison for accepting bribes in exchange for test referrals as part of a long-running scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Charles Goldberg, 61, of West Orange, 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 Goldberg imposed the sentence today in in Newark federal court.

Including Goldberg, 34 people – 23 of them physicians– 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.

According to documents filed in these and related cases and statements made in court: Goldberg admitted accepting bribes of $1,800 per month through a sham lease agreement with BLS, which identified the waiting room, bathroom and one examination room in Goldberg’s office as being leased.

In addition to the prison term, Judge Chesler sentenced Goldberg to one year of supervised release and fined him $50,000. As part of his guilty plea, Goldberg must forfeit $58,000, representing the bribes he received from BLS.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; 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 Acting 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 leading to today’s sentencing.

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

15-036                                            

NEWARK, N.J. – A Monmouth County doctor with practices in Colts Neck, New Jersey, and Staten Island, New York, today admitted 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.

Ralph Messo, 53, of Colts Neck, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes. 

Including Messo, 34 people – 23 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 $10.5 million to date through forfeiture.

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

Messo admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $3,000 per month. Messo’s referrals generated at least $828,000 in lab business for BLS.

On April 9, 2013, federal agents arrested David Nicoll, 40, of Mountain Lakes, New Jersey, Scott Nicoll, 33, of Wayne, New Jersey, a senior BLS employee and David Nicoll’s brother, and Craig Nordman, 35, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme

The bribery count to which Messo pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for May 12, 2015. As part of his guilty plea, Messo must forfeit $82,500, representing the total bribe monies received from BLS.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; 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 Acting 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 leading to today’s guilty pleas.

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

15-038                                           

Defense counsel: Joseph R. Benfante Esq., New York

CAMDEN, N.J. – A Palmyra, New Jersey, man was sentenced today to 108 months in prison for using a computer in his home to distribute images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Donald Kivel, 38, previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information charging him with one count of receiving child pornography. Judge Rodriguez imposed the sentence today in Camden federal court.

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

Kivel admitted downloading images of child pornography that were available for distribution using peer-to-peer sharing software using a computer in his residence in June and July 2011. He also admitted to possessing more than 600 images of child pornography on his computer, which was seized from his residence July 15, 2011.  Kivel acknowledged that among the images he possessed and distributed were images which depicted minors posing in a sexually explicit manner, images of child pornography involving children under the age of 12, and images that portrayed sadistic and/or masochistic conduct or other images of violence.

In addition to the prison term, Judge Rodriguez sentenced Kivel to serve 10 years of supervised release and ordered him to pay restitution of $19,980.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s sentencing.

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

15-035                                                            

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

TRENTON, N.J. – A New York man today admitted 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, of Brooklyn, New York, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to a superseding information that charged him with one count of conspiracy to commit Hobbs Act robberies.

Williams was arrested on Feb. 14, 2013, and charged in a superseding indictment — along with Carl Williams, 31, and Unique Randolph, 28, both of Brooklyn – in connection with several armed robberies of electronic stores in New Jersey. Eric Williams has been in custody since his arrest.

According to documents filed in this case and statements made in court: On Sept. 20, 2012, Carl Williams 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 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. 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 the getaway driver, 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. Randolph 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 tie him up. Randolph and his conspirator then fled, along with Carl Williams who was waiting outside as a lookout.

The charge of conspiracy to commit Hobbs Act robberies carries a maximum potential penalty of 20 years in prison and a maximum fine of $250,000. Carl Williams, Arrington and Randolph have previously pleaded guilty.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s guilty plea. 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.

15-033                             

Defense counsel: Carl Williams: Mark A. Berman Esq., River Edge, N.J.
Eric Williams: Michael A. Armstrong Esq., Willingboro, N.J.
Unique Randolph: Damian P. Conforti Esq., Newark
Leonard Arrington: Dennis S. Cleary Esq., Newark

CAMDEN, N.J. - An Atlantic City, New Jersey, man was sentenced today to 120 months in prison for engaging in a conspiracy to distribute heroin with Mykal Derry, a leader of the “Dirty Block” criminal street gang that allegedly used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City, U.S. Attorney Paul J. Fishman announced.

Aree Toulson, a/k/a “Beyah,” a/k/a “Beyeazz,” 26, 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:

Toulson acted as a distributor on behalf of Mykal Derry, 34, of Atlantic City, helping Dirty Block distribute heroin in and around the public housing apartment complexes of Stanley Holmes, Carver Hall, Schoolhouse, Adams Court and Cedar Court in Atlantic City.

Toulson was arrested on March 26, 2013. He and others travelled with Mykal Derry to a shooting range in Lakewood, New Jersey, on Oct. 18, 2012, where Toulson – a previously convicted felon – used, possessed, and discharged a firearm.  According to filed documents, members of the group also participated in a violent altercation with rival drug traffickers at an Atlantic City casino in December 2012.

In addition to the prison term, Judge Irenas sentenced Toulson to serve eight 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 Aaron T. Ford; 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 sentencing.

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 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.

The charges and allegations against Derry are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

15-034                                           

Defense counsel:  Paul George Esq., Philadelphia

NEWARK, N.J. – A Belvidere, New Jersey, man today admitted he concealed a mortgage fraud scheme carried out by his wife, a former real estate title agent, in which they obtained seven loans, totaling more than $3.7 million, on two properties located in Belvidere and Wood-Ridge, New Jersey, U.S. Attorney Paul J. Fishman announced.

Zbigniew Cichy, 45, pleaded guilty before U.S. District Judge Stanley R. Chesler to a superseding information charging him with one count of misprision of felony.

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

Cichy owned and operated Global Builders LLC, a construction company. His wife, Ania Nowak, 48, also of Belvidere, was the owner and operator of A.N. Title Agency LLC and was an agent for Stewart Title Guaranty Company.

Nowak obtained seven mortgage loans through fraudulent means, including: an April 2005 loan for her sham sale of the Wood-Ridge property to Cichy; Cichy’s November 2005 refinancing loan on the Wood-Ridge property; a 2005 construction loan to build a house on the Belvidere property owned by Cichy; Cichy’s August 2006 loan on the Belvidere property; May 2007 loans for Cichy’s sham sale of the Belvidere property to another conspirator in the scheme, Kim Salvemini, 60, of Wallington, New Jersey; Salvemini’s May 2007 refinancing loan on the Belvidere property; and Cichy’s November 2007 refinancing loan on the Belvidere property. Nowak admitted that, for each of the seven loans, she lied on loan documents, failed to pay off prior mortgages at closing, failed to record the mortgages and any deeds and that most of the loans went into default for non-payment.

Cichy admitted that although he was aware of the mortgage fraud scheme, including Nowak’s failure to pay off existing liens at closing, he failed to report the fraudulent mortgage transactions to authorities. Instead, Cichy took steps to conceal the scheme by making mortgage payments on a number of the fraudulent loans out of his personal and business accounts to prevent foreclosure and thereby conceal from lenders that the loans had been obtained through fraud. Cichy also admitted to lying on certain loan documents that were used in furtherance of the scheme.

The charge of misprision of felony to which Cichy pleaded guilty carries a maximum penalty of three years in prison and a fine of $250,000, or twice the gross gain or loss resulting from the offense. Sentencing is scheduled for May 5, 2015.

Nowak pleaded guilty on Jan. 15, 2015, and is also scheduled to be sentenced May 5, 2015.  Salvemini previously pleaded guilty to her role in the scheme and awaits sentencing.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu and Senior Litigation Counsel Leslie F. Schwartz of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark.

Today’s guilty plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s 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 more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

15-031                                 

Defense counsel:  Carl J. Herman Esq., West Orange, New Jersey

NEWARK, N.J. – A Hudson County, New Jersey, man was arrested today and charged with violating a defendant’s civil rights by using excessive force during an arrest that took place in Bayonne, New Jersey, as well as falsifying records in an attempt to conceal the alleged crime, Attorney Paul J. Fishman announced.

Police Officer Domenico Lillo, 44, of Bayonne, New Jersey, was arrested by federal agents this morning and after a federal grand jury in Newark returned an indictment charging him with the deprivation of civil rights under color of law and falsification of records. Lillo had his initial appearance and arraignment before U.S. Magistrate Judge James B. Clark III in Newark federal court. He was released on $100,000 unsecured bond.

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

On the early evening of Dec. 27, 2013, Lillo and other police officers from the Bayonne Police Department went to an address in Bayonne to execute a Sussex County arrest warrant. Lillo allegedly struck the subject of the warrant with a flashlight while the individual was handcuffed and not resisting arrest, which resulted in bodily injury. Lillo allegedly falsified a Bayonne Police Department Use of Force Report related to the arrest with the intent to impede an investigation into the case.

The use of excessive force count with which Lillo is charged carries a maximum penalty of 10 years in prison. The charge of falsifying records carries a maximum penalty of 20 years in prison.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and 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, with the continuing investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney Jacques S. Pierre of the Special Prosecutions Division and Assistant U.S. Attorney Steven G. Sanders of the Appeals Division.

15-032                                         

Defense counsel: Frank Arleo Esq. West Orange, N.J.

NEWARK, N.J. – A former contractor of the Newark Watershed Conservation and Development Corporation (NWCDC) today admitted his role in a bribery and kickback scheme involving an employee and consultant of the NWCDC, U.S. Attorney Paul J. Fishman announced.

James Porter, 78, of East Orange, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him with one count of conspiring with Donald Bernard Sr., a former employee and consultant of the NWCDC, and others, to defraud the NWCDC and one count of tax evasion.

According to documents filed in this case and statements made in court: Between October 2008 and April 2013, Porter conspired with Bernard to provide Bernard and others with a stream of concealed, undisclosed kickbacks in exchange for Bernard’s assistance in securing business opportunities and payments to two companies operated by Porter: Jim P. Enterprises LLC (JPE) and New Beginnings Environmental Services (NBES), a company in which Bernard was also a partner. Both JPE and NBES purported to perform landscaping, snow removal, clean-up and sign posting services to the NWCDC from 2008 through 2013. JPE received payments from the NWCDC totaling more than $500,000 and NBES received approximately $290,000 from the NWCDC.  Both companies submitted invoices to the NWCDC that were fraudulently inflated to cover kickback payments to Bernard and billed for some services, such as landscaping and snow removal, which were never performed. 

Porter passed a stream of kickback payments to Bernard totaling more than $500,000, which was funded by the proceeds JPE and NBES obtained from the NWCDC, including cash withdrawn from the bank accounts of JPE and NBES totaling $378,867; Bernard’s use of an ATM card issued in his name to withdraw at least $74,681 directly from the NBES bank account; Bernard’s use of the NBES ATM card issued in Bernard’s name to pay personal expenses of nearly $5,000; and checks written from the accounts of JPE and NBES totaling $41,650, which were made payable to Bernard, or to companies he controlled, including a consulting company, Bernard & Associates, and the African American Heritage Parade Committee (AAHPC).

In August 2012, Porter also accepted a $5,000 check payable to JPE from Essex Home Improvements, another contractor of the NWCDC for work that was never performed, and delivered the proceeds to Bernard. The payment from Essex Home Improvements was provided to JPE, rather than to Bernard directly, as a means of concealing a kickback from Essex Home Improvements to Bernard.  Bernard and Giacomo DeRosa, 58, a Clinton Township, New Jersey contractor, have been charged in separate indictments and are awaiting trial.

From 2009 to 2012, Porter failed to report income of $767,750 from the proceeds that JPE and NBES received from the NWCDC. Porter also pleaded guilty today to intentionally underreporting income for the 2012 tax year on his personal tax return by $151,603, resulting in tax due and owing of $48,971.
The conspiracy to defraud count and the tax evasion count to which Porter pleaded guilty each carry a maximum potential penalty of five years in prison and a fine of either $250,000 or twice the gain or loss from the offenses. The government is also seeking forfeiture of $573,333. Sentencing is scheduled for May 12, 2015.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford; special agents of IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and the Office of Inspector General, U.S. Department of Housing and Urban Development, under the direction of Special Agent in Charge Christina Scaringi, as well as criminal investigators of the U.S. Attorney’s Office, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Jacques S. Pierre and Mala Ahuja Harker of the U.S. Attorney’s Office Special Prosecutions Division.

The charges and allegations in the indictment against Bernard and DeRosa are merely accusations, and the defendants are considered innocent unless and until proven guilty.

15-030                                               

Defense counsel:  Anthony Mack Esq., Newark         

TRENTON, N.J. – A regional manager selling medical devices to hospitals for Integra LifeSciences Corp. of Plainsboro, New Jersey, was sentenced to prison today for his role in a scheme to defraud hospitals of more than $800,000, U.S. Attorney Paul J. Fishman announced.

Daniel Metz, 34, of Fairfield, New Jersey, was sentenced to nine months in prison and nine months of home confinement. Charles B. Carey Jr., 35, of Clark, New Jersey, whose cooperation led to Metz’ conviction, was sentenced to three years of probation. Metz and Carey previously pleaded guilty before U.S. District Judge Joel A. Pisano to separate informations charging them with conspiracy to commit wire fraud. Judge Pisano imposed the sentences today in Trenton federal court.

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

Integra is a provider of orthopedic products, including devices and implants for the spine, foot and ankle, hand and wrist, and shoulder and elbow. Metz worked there from July 2005 until his termination in April 2013, first as a product specialist (also referred to as a sales representative) and then as Northeast regional manager, supervising 16 product specialists and assistant sales representatives in Massachusetts, New Jersey, New York, and Pennsylvania.  Carey was a product specialist, reporting to Metz, from January 2009 until he resigned in April 2011.

Product specialists at Integra were responsible for calling on surgeons to increase sales volume and were routinely present during surgeries. When present during surgeries, product specialists brought with them consignment trays with pre-packaged Integra products available to surgeons, as well as surgery-specific products. Integra billed the hospitals and surgery centers for the products used and product specialists (and their supervisors) were compensated based on salary, sales target-based commission and bonuses.

Metz admitted he used various fraudulent methods to overcharge hospitals and surgery centers. He would sometimes charge for a greater quantity or a more expensive product than was actually used, increasing his compensation and improving his employment evaluations.

Metz and Carey admitted that after Metz became regional manager, he taught at least some of the fraudulent methods to product specialists working for him, including Carey, who sometimes employed those methods.

Metz and Carey fraudulently caused medical facilities to pay more than $800,000 in inflated bills.

In addition to the prison term and home confinement, Judge Pisano sentenced Metz three years of supervised release. As part of their plea agreements, Metz and Carey will forfeit $100,000 and $77,000, respectively, representing the amounts of money they personally made through the fraud scheme. The defrauded hospitals have been reimbursed by Integra for the fraudulent charges.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation. He also thanked detectives of the Morris County Prosecutor’s Office, under the direction of Prosecutor Fredric M. Knapp, for their contributions to the investigation.

The government is represented by Jacob T. Elberg, Chief of the U.S. Attorney’s Office’s 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.

15-029                                               

Defense counsel: Metz: Lawrence Lustberg Esq., Newark
Carey: Timothy Donohue Esq., West Orange, N.J.

TRENTON, N.J. – The developer of three Trenton affordable housing projects was sentenced today to 27 months in prison for making false statements to a financial institution to divert project money for personal and other unauthorized purposes, and to conducting a transaction with the proceeds of this crime, U.S. Attorney Paul J. Fishman announced.

Robert Kahan, 69, of Sunny Isles Beach, Florida, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to two counts of an indictment charging him with making false statements in a loan application (Count 8) and to transacting in criminal proceeds that resulted from those false statements (Count 12). Judge Sheridan imposed the sentence today in Trenton federal court.

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

Between 2006 and 2009, Kahan was a developer of three affordable housing projects in Trenton – the Canal Plaza Homeownership Project, the Southwest Village II Project and the Catherine S. Graham Project – for which he obtained both private and public funding.

The Southwest Village II Project was a project to construct 52 affordable housing units. Kahan diverted substantial portions of the project’s financing from a $6,435,000 construction loan from Roma Bank to his own personal use, his other development projects and other uses that were outside of the project budget. In October 2008, Kahan diverted $343,354 of Southwest Village II project financing and applied it as a down payment to purchase a Florida condominium. In numerous payment applications made to the loan administrator for the project financing requesting advances of loan and subsidy money, Kahan falsely stated that all money that he was previously paid had been used to pay costs for labor, materials and other obligations for the Southwest Village II Project.

In addition to the prison term, Judge Sheridan sentenced Kahan to four years of supervised release. Under terms of the plea agreement, Kahan must forfeit $989,901 in criminal proceeds.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Christina Scaringi, Special Agent in Charge, Northeast Region, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Eric Moran in Trenton and Senior Litigation Counsel Mark J. McCarren in Newark, both of the U.S. Attorney’s Office Special Prosecutions Division.

15-027                                                              

Defendant Must Also Pay $900,000 in Forfeiture and Civil Damages

NEWARK, N.J. – A doctor with offices in Newark, Union City, Paterson and Passaic today admitted his role in a three-year scheme to bill Medicare for services that were not provided and services provided by unlicensed and unsupervised providers, U.S. Attorney Paul J. Fishman announced.

Benjamin Sabido, 62, of Franklin Lakes, N.J., pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an information charging him with health care fraud.

According to documents filed in this case, statements made in court and the civil settlement agreement:

From at least December 2006 through April 2010, Sabido received $237,182 from Medicare and Medicaid based upon fraudulent claims. He instructed staff to submit bills for physical therapy services that were not in fact provided. He authorized and encouraged unqualified staff members to provide physical therapy services, including electrical stimulation, massage, and other therapeutic services. During the time period of the scheme, Sabido did not employ any licensed physical therapists, nor anyone otherwise qualified to provide physical therapy services.

The count of health care fraud to which Sabido pleaded guilty carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.  Sentencing is scheduled for May 14, 2015.

Sabido will pay $700,545, plus interest, to resolve allegations arising from Sabido’s submission of claims for physical therapy and nerve conduction studies. From December 2006 to December 2010, Sabido submitted to Medicare and Medicaid claims for physical therapy services that were rendered because the patients wanted these services and not necessarily because they benefited from them, were not provided pursuant to a plan of care, were not properly supervised, or were not provided by qualified personnel. The settlement alleges that from January 2006 through December 2010, Sabido submitted to Medicare claims for nerve conduction studies for which Sabido’s patient charts do not establish that the services were medically necessary or, in some cases, even rendered. Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.

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

The government is represented in the criminal case by Assistant U.S. Attorney Joseph Mack, Deputy Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, and in the civil settlement by Assistant U.S. Attorney Charles Graybow of the Health Care and Government Fraud 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 $625 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Federal Food, Drug and Cosmetic Act and other statutes.

15-026                                                               

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

TRENTON, N.J. – A Monmouth County, New Jersey, man was sentenced today to 276 months in prison for his involvement in a 24-hour crime spree in five separate shore-area towns that involved the shooting of a cab driver and a number of armed robberies, U.S. Attorney Paul J. Fishman announced.

Quam Wilson, 24, of Neptune, New Jersey, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to the first two counts of an indictment charging him with committing a Hobbs Act robbery and using a firearm during the commission of that robbery. Judge Sheridan imposed the sentence today in Trenton federal court.

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

Wilson engaged in a crime spree that began at approximately 5:00 a.m. on Nov. 13, 2012, when he robbed a cab driver in Asbury Park. The driver was shot during the robbery. The victim, who survived, sustained a single gunshot wound to the head and was taken to Jersey Shore University Medical Center. During the plea hearing, Wilson admitted he took the cab driver’s identification, taxi keys and debit card during the robbery.

After robbing the taxi driver, Wilson proceeded to a Shell gas station located in Ocean Township. There, he approached a gas station attendant and, while brandishing a handgun, robbed him of cash and fled the area. Later that morning, Wilson attempted to obtain money from the cab driver’s bank account from several area banks. Suspecting that a theft was taking place, a bank employee confiscated the identification and debit card from Wilson and contacted police.  At approximately 9:00 p.m., that same day, he committed an armed robbery at a taxi stand in Long Branch, again while brandishing a handgun.

During the early morning hours of the next day, Nov. 14, 2012, Wilson robbed an Exxon gas station in Red Bank at gunpoint. A short time later, Wilson entered a Quick Check convenience store in Neptune Township. Again, he pointed a handgun at a cashier and demanded money. Wilson was arrested at approximately 10:00 p.m. later that day by several police officers in Asbury Park, where he had been hiding in an attic.

In addition to the prison term, Judge Sheridan sentenced Wilson to serve five years of supervised release. Restitution will be determined at a later date. Wilson’s sentence will be served consecutively to a state prison term he is currently serving. He was sentenced on March 14, 2014, to eight years in state prison with a four- year period of parole ineligibility.

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in George Belsky, with the investigation leading to today’s sentencing. He also thanked the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni, Asbury Park Police Department, Ocean Township Police Department, Long Branch Police Department, Neptune Township Police Department and the United States Marshals Service N.Y. /N.J. Regional Fugitive Task Force for their assistance.

The government is represented by Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office in Trenton, and Special Assistant U.S. Attorney Jacquelynn Seely from the Monmouth County Prosecutor’s Office.

15-028                                                          

TRENTON, N.J. – An Ocean County, New Jersey, attorney was sentenced today to 46 months in prison for his role in a scheme that defrauded investors in connection with a Facebook IPO and several real estate deals, U.S. Attorney Paul J. Fishman announced.
 
Fred Todd, 61, of Lakewood, New Jersey, previously pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to an information charging him with one count of conspiracy to commit wire fraud and one count of transacting in criminal proceeds.

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

Todd is an attorney with offices in Seaside Heights, New Jersey, and Los Angeles, California. His two co-defendants, Eliyahu Weinstein, 39, of Lakewood, and Aaron Glucksman, 41, of Brooklyn, New York, have already pleaded guilty to charges related to their roles in the scheme.

Weinstein, already convicted and sentenced to 22 years in prison in a separate Ponzi scheme, pleaded guilty on Sept. 3, 2014, to three counts of an indictment pending against him: one count of conspiracy to commit wire fraud, one count of committing wire fraud while on pretrial release, and one count of money laundering. He was sentenced on Dec. 15, 2014, on those charges to an additional two years in prison.

Glucksman has also pleaded guilty and was sentenced by Judge Pisano on May 5, 2014, to 52 months in prison, three years of supervised release, and ordered him to forfeit $1.2 million. Judge Pisano ordered Glucksman’s sentence to run partially concurrently with a 36-month sentence recently imposed by U.S. District Judge Raymond J. Dearie of the Eastern District of New York in an unrelated case.

In February 2012, Todd and his conspirators offered a pair of investors (referred to in the information as the “Facebook victims”) the opportunity to purchase large blocks of Facebook shares prior to the company’s initial public offering, or IPO, in May 2012. The offer was particularly attractive because large blocks of the shares were extremely difficult to get and were expected to increase in value at the time of the IPO. Weinstein and his conspirators did not actually have access to the shares.

Based on misrepresentations by the conspirators, the Facebook victims wired millions of dollars between February and March of 2012 to an account Weinstein and a conspirator controlled. Weinstein and another conspirator provided investors with false documents showing companies owned by various conspirators held assets, which would secure the Facebook victims’ investment.

The conspirators did not use any of the Facebook victims’ money to purchase Facebook shares, instead misappropriating it for their own use.

Around the same time, Todd and his conspirators also persuaded victims to invest in the purported purchase of an apartment complex in Florida. They told the victims that Weinstein had the opportunity to purchase the notes on the condominiums at a discounted price and immediately flip it at a substantial profit. The victims wired money to complete the purchase, but Todd and his conspirators instead used the money for their own purposes.

In addition to the prison term, Judge Pisano sentenced Todd to three years of supervised release and ordered him to pay restitution of $6.53 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s guilty plea. He also thanked agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for their role in the investigation.

The government is represented by Counsel to the U.S. Attorney Rachael A. Honig; Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Zach Intrater of the Economic Crimes Unit.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s 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 more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

15-025                                                          

Defense counsel: James Filan Esq., Westport, Conn.

Todd, Fred Information

NEWARK, N.J. – A North Carolina man was sentenced today to three years of probation and ordered to pay more than $750,000 in restitution for role in one of the nation’s largest and longest running stolen identity refund fraud schemes ever prosecuted, U.S. Attorney Paul J. Fishman announced.

Luis Martinez, 49, of Matthews, N.C., previously pleaded guilty before U.S. District Judge Claire C. Cecchi, to an information charging him with conspiracy to defraud the United States and theft of government property. The conspiracy caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds and resulted in losses to the United States of more than $12 million.

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

Stolen Identity Refund Fraud (SIRF) is a common type of fraud that results in over $2 billion in losses annually to the U.S. Treasury. SIRF schemes generally share a number of hallmarks:

• SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico;
• SIRF participants complete Individual Income Tax Return 1040 Forms using the fraudulently-obtained information, and falsifying wages earned, taxes withheld and other data. Perpetrators use data to make it appear that the “taxpayers” listed on the fraudulent 1040 form are entitled to tax refunds – when in fact, the various tax withholdings indicated have not been paid and no refunds are due;
• SIRF perpetrators direct the U.S. Treasury Department to issue the refunds through checks to locations they control or can access, in various ways;
• SIRF perpetrators generate cash proceeds. Some sell the checks at a discount to face value. The buyers then cash the checks at banks or check cashing businesses or deposit them into bank accounts.

Federal law enforcement agencies, recognizing that SIRF was a serious problem, created a multi-agency task force in New Jersey comprised of investigators from the IRS and the U.S. Postal Inspection Service, along with the U.S. Secret Service, and with assistance from the Drug Enforcement Administration (the “New Jersey Task Force”). 

An investigation led by the New Jersey Task Force with assistance from U.S. Immigration and Customs Enforcement, Homeland Security Investigations has revealed that starting as early as 2007, dozens of individuals in the New Jersey and New York area have been engaged in a large-scale, long running SIRF scheme. The scheme has caused more than 8,000 fraudulent 1040 forms to be filed, seeking more than $65 million in tax refunds, with losses to the U.S. Treasury of more than approximately $12 million.

Members of the conspiracy obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. They used those identifiers to create fake 1040s, which falsely reported wages purportedly earned by the “taxpayers” and taxes purportedly withheld, to create the appearance that the “taxpayers” were entitled to tax refunds. The returns were filed electronically. By tracing the specific IP addresses that submitted them, law enforcement officers learned just a handful of IP addresses created many of the fraudulent forms that led to the issuance of tax refund checks.

Martinez and the other members of the conspiracy then gained control of checks, sometimes bribing mail carriers to intercept checks and deliver them to other members of the conspiracy.

During the course of the investigation, members of the task force identified certain “hot spots” of activity and intercepted more than $22 million in fraudulently-applied for refund checks before they were delivered to members of the conspiracy.

U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Marie Kelokates; the U.S. Secret Service, under the direction of Acting Special Agent In Charge Carl Agnelli; and the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl J. Kotowski, for the investigation leading to today’s sentencing.

In addition to the three-year term of probation, Judge Cecchi ordered Martinez to pay $753,041 in restitution and fined him $10,000.

The government is represented by Assistant U.S. Attorneys Danielle Alfonzo Walsman, Mala Ahuja Harker, Lakshmi Srinavasan Herman, and Zach Intrater of the U.S. Attorney’s Office Criminal Division in Newark.

15-023