District of New Jersey

TRENTON, N.J. - Convicted Ponzi schemer Eliyahu Weinstein, 38, of Lakewood, N.J., was arraigned today in federal court in Trenton on new charges relating to an alleged scheme to defraud victims regarding purported investments in Facebook stock and Florida real estate, U.S. Attorney Paul J. Fishman announced.

Two co-defendants, Alex Schleider, 48, of Lakewood, and Aaron Glucksman, 41, of Brooklyn, N.Y., also appeared in court today and admitted participating in the fraudulent scheme with Weinstein. 
Weinstein was arraigned before U.S. District Judge Joel A. Pisano, in Trenton federal court on an indictment returned April 17, 2014, by a federal grand jury sitting in Newark and entered a plea of not guilty. That indictment charges Weinstein with defrauding victims through three investment schemes: (1) pre-IPO shares of Facebook stock; (2) the purchase of an apartment complex in Florida; and (3) the purchase of the mortgage notes on seven Florida condominiums. Weinstein, Schleider, and a third defendant, Aaron Muschel, 64, were originally charged by criminal complaint with the Facebook fraud in May 2013.

Schleider pleaded guilty today before Judge Pisano to an information charging him with one count of wire fraud. He admitted to participating with Weinstein in a scheme in which victims referred to as “Victim G.C.” and “Victim J.C.” lost more than $2.8 million that the victims had invested to purchase the Florida apartment complex. Schleider also agreed to restitution and forfeiture of $612,300. The charge to which Schleider pleaded guilty carries a maximum penalty of 20 years in prison and a $250,000 fine. His sentencing is scheduled for Sept. 18, 2014.

Glucksman pleaded guilty today before Judge Pisano to an information charging him with one count of conspiracy to commit wire fraud and one count of transacting in criminal proceeds. He admitted during his plea hearing that, together with Weinstein and others, he defrauded victim-investors referred to as “the Florida condominium victims” out of $1.5 million. Glucksman admitted that, in concert with Weinstein, he duped these victims by using fraudulent e-mails to pretend to be an attorney named “Arthur Golden,” who purportedly was handling the closing of the transaction, and to pose as the supposed property manager of the condominiums.  Glucksman also admitted to helping Weinstein conduct financial transactions with the proceeds of the fraud.

The charges to which Glucksman pleaded guilty carry maximum penalties of 20 years in prison and a $250,000 fine (conspiracy) and 10 years in prison and a $250,000 fine (transacting in criminal proceeds).

Judge Pisano sentenced Glucksman today 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 on Glucksman by U.S. District Judge Raymond J. Dearie of the Eastern District of New York in an unrelated case. Glucksman remains on release pending his designation to a federal institution by the U.S. Department of Justice, Bureau of Prisons.

According to the charging documents in these cases and statements made in court:

In February of 2012, Weinstein and his fellow conspirators allegedly offered a pair of investors (referred to in the indictment 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 they 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 alleged misrepresentations by Weinstein and his 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 convinced the Facebook victims to send the money by, among other things, providing them 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 and benefit by moving it through various accounts. Weinstein used some of the money to pay lawyers and experts representing him in his earlier – and at that time, still pending – criminal case and in related civil matters. Weinstein and his conspirators also used the Facebook victims’ money to make investments in a number of different businesses unrelated to Facebook, and to make loans for their own benefit.

Around the same time, Weinstein and his conspirators also persuaded the Facebook victims to invest in the purported purchase of an apartment complex, “Belle Glade Gardens,” in Florida. They falsely told the Facebook victims that Weinstein had the opportunity to purchase Belle Glade Gardens at a discounted price and immediately flip it at a substantial profit.  Weinstein and his conspirators further told the Facebook victims that Weinstein had already placed $2.5 million in the trust account of a Miami law firm for the transaction; that if the Facebook victims contributed another $2.5 million toward the transaction, those funds would remain in escrow at the Miami law firm until the deal closed; and that the Facebook victims would be repaid within 60 days. In reliance on these representations, the Facebook victims wired approximately $2.83 million to the Miami law firm in order to complete the Belle Glades Gardens transaction. Weinstein and his conspirators, however, did not use the money to purchase Belle Glades Gardens. Instead, they allegedly redirected the money from the law firm to accounts that they controlled, returned $1.8 million to the Facebook victims as a purported return on their Facebook investment, and used the remaining money for their own purposes.

In July 2012, Weinstein allegedly approached another group of investor victims (referred to in the indictment as the “Florida condominium victims”) and told them that he had the opportunity to purchase the notes on seven condominiums in Florida at a discounted price of $3 million. Weinstein and his conspirators falsely represented that they had already paid $1.5 million toward the deal, and that they needed only $1.5 million to complete the transaction.  They claimed that the properties had an annual rental income of approximately $780,000, and provided to the Florida condominium victims fraudulent documentation purporting to verify this fact. The Florida condominium victims transferred approximately $1.5 million to Weinstein and his conspirators between August 2012 and December 2012.  Weinstein did not use this money to purchase the notes on the Florida condominiums – many of which he himself had previously owned and lost to foreclosure.  Instead, Weinstein and his conspirators converted the money to their own use and benefit.

Throughout the scheme, Weinstein was already under indictment and on pretrial release, and was prohibited from engaging in any monetary transaction for more than $1,000 without the approval of court-appointed special counsel. Weinstein pleaded guilty on Jan. 3, 2013, before U.S. District Judge Joel A. Pisano in Trenton, N.J., to two counts of that indictment, admitting he ran a Ponzi-style real estate investment fraud scheme that caused $200 million in losses and then laundered the proceeds of the scheme. Judge Pisano sentenced Weinstein on Feb. 25, 2014, to 264 months in prison and ordered him to pay more than $200 million in restitution and forfeiture to the victims of his scheme.

The conspiracy count with which Weinstein is charged carries a maximum potential penalty of 20 years in prison; the wire fraud counts carry a maximum potential penalty of 30 years in prison (20 years on the wire fraud plus 10 years for commission while on pretrial release); and the transacting in criminal proceeds counts carry a maximum potential penalty of 10 years in prison. All the counts are also punishable by a $250,000 fine.

Charges against Muschel, who was charged in the criminal complaint filed against Weinstein and Schleider in May 2013, remain pending.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for their investigation of this case. He also credited special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for their important contributions.

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. Attorneys Zach Intrater of the Economic Crimes Unit and Evan S. Weitz of the Asset Forfeiture and Money Laundering Unit.

The charges and allegations against defendants Weinstein and Muschel are merely accusations, and they are considered innocent unless and until proven guilty.

Today’s proceedings are 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.

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Defense counsel: Weinstein: Eric Creizman Esq., New York
Glucksman: Alexei Schacht Esq., New York
Schleider: Marc Agnifilo Esq., New York

Weinstein, Eliyahu Indictment II
Glucksman, Aaron Information
Schleider, Alex Information

NEWARK, N.J. - A man allegedly responsible for a three-county New Jersey bank robbery spree faces a federal charge today following his arrest yesterday, May 1, 2014, after the rush hour robbery of a Rahway Savings Institute in Colonia, U.S. Attorney Paul J. Fishman announced.

Jason Novello, 35, of Elizabeth, N.J., is charged by complaint with one count of bank robbery in connection with the Colonia theft. He made his initial appearance today before U.S. Judge James B. Clark, III in Newark federal court and was detained. 

According to the complaint filed today and statements made in court: At approximately 9:05 a.m. on May 1, 2014, Novello entered the Rahway Savings Institute in Colonia, approached a bank teller and held up a note claiming he had a gun and demanding money. The teller gave the cash to Novello, including two “bait bills” from which the serial numbers had been pre-recorded by the bank.

A bank employee followed Novello out of the bank and noted the license plate of the blue Hyundai Elantra in which Novello fled. Law enforcement officers were able to track the car’s registration to an address where they waited for Novello. FBI agents arrested him when he showed up in the Hyundai.

Including the latest Colonia robbery with which he is charged, the complaint alleges Novello committed nine robberies in the nine months from August 2013 to May 2014, hitting two of the banks – in Colonia and Elizabeth – twice each:

May 1, 2014

Rahway Savings Institute, Colonia

PNC Bank, Scotch Plains

March 22, 2014

Rahway Savings Institute, Colonia

March 8, 2014

Capital One Bank, Iselin

March 1, 2014

PNC Bank, Edison

Jan. 25, 2014

Capital One Bank, North Plainfield

Dec. 7, 2013

PNC Bank, Fanwood

Oct. 30, 2013

Investors Savings Bank, Elizabeth

Aug. 30, 2013

Investors Savings Bank, Elizabeth

The bank robbery charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and thanked the Middlesex and Somerset County Prosecutors’ Offices, as well as the Woodbridge, Edison, North Plainfield, Fanwood, Scotch Plains and Elizabeth police departments for their work.

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

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

Novello, Jason Complaint

Third Defendant, Former President of Vonetex LLC, Will be Sentenced for Paying Kickbacks

TRENTON, N.J. - A former project manager for Unisys and his girlfriend today admitted they were paid nearly $100,000 in kickbacks in connection with staffing a Transportation Security Administration (TSA) contract for high-tech phone systems, U.S. Attorney Paul J. Fishman announced.

James Anderson, 55, and Vickie Idoux-Walz, 48, both of Gainesville, Ga., pleaded guilty today before U.S. District Judge Michael A. Shipp to separate informations charging them with conspiracy to solicit and accept kickbacks in connection with a government contract. Neil Metzger, 41, of Leesburg, Va., was the president of Vonetex LLC, and has already pleaded guilty. He will be sentenced tomorrow.

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

Vonetex is a technical services and training company. Unisys, a government contractor, won a contract from the U.S. Department of Homeland Security that included the installation and servicing of high-tech phone services for the TSA. Vonetex was awarded a subcontract through an intermediary company, Izar Associates Inc.

Vonetex was paid, through Izar, for each hour that its employees and contractors billed under the contract. Anderson was an engineer and a project manager at Unisys who supervised the contracted work. Idoux-Walz was in a romantic relationship with Anderson, but was not an employee of Vonetex, Unisys, or Izar.

Anderson admitted that in November 2008, he agreed with Metzger to accept kickback payments, paid through Idoux-Walz, that were equal to $5 or $10 per hour that each Vonetex employee and contractor billed to the contract.

Idoux-Walz admitted that in December 2008 she and Metzger entered into a written agreement in which Vonetex would pay Idoux-Walz a fee for consulting services. The agreement also stated that for each hour billed by a Vonetex resource at Unisys, Idoux-Walz was to be given credits which could be used for discounts on additional work or equipment, or redeemed for cash. Each month, Idoux-Walz sent Metzger an invoice based on hours billed by Vonetex employees and contractors, and Metzger periodically sent kickback checks to Idoux-Walz with the understanding that the money represented the kickback payments Metzger had agreed to pay Anderson.

Anderson and Idoux-Walz together received a total of $97,850 in kickbacks from Metzger.

The count of conspiracy to accept kickbacks in connection with a government contract to which Anderson and Idoux-Walz pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine.

Metzger pleaded guilty on Jan. 14, 2014, to conspiring to pay kickbacks in connection with a government contract. Metzger also admitted that he made false claims against the government in the form of overbilling in June and July 2010, which resulted in a loss to the government of approximately $100,000. Metzger has entered a plea agreement with the government in which all parties agreed to a sentence of 15 months in prison. He is scheduled to be sentenced tomorrow before Judge Shipp in Trenton.

U.S. Attorney Fishman credited special agents of the U.S. Department of Homeland Security, Office of Inspector General, under the direction of Special Agent in Charge Gregory K. Null, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office in Trenton.

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Defense counsel:

James Anderson: Andrea Bergman Esq., Trenton, N.J.
Vickie Idoux-Walz: Joshua Markowitz Esq., Lawrenceville, N.J.
Neil Metzger: Michael Sullivan Esq., Morristown, N.J., and Danny Onorato Esq., Washington, D.C.

Anderson, James Information
Idoux-Walz, Vickie Information

NEWARK, N.J. – A former attendance liaison officer for the Elizabeth, N.J., Board of Education (EBOE) today admitted obtaining by fraud more than $5,000 by working a second job during hours when he was supposed to be tracking down truant students, U.S. Attorney Paul J. Fishman announced.

Scott J. Farley, 45, of Cranford, N.J., pleaded guilty before U.S. District Judge Kevin McNulty to an information charging him embezzling and converting to his own use more than $5,000 of money in the control and custody of the EBOE.

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

Farley worked for the EBOE at an annual salary of $40,499 and $42,825 for school years 2009-2010 and 2010-2011, respectively. As an attendance liaison officer, he was expected to perform his duties during the school day, which lasted from approximately 8:15 a.m. to 3:00 p.m., by conducting home visits relating to excessive school absences by students. During this time, Farley worked in the shipping and receiving department of a private corporation based in Mountainside, N.J.

Time sheets from the corporation revealed Farley worked there during many hours when he was supposed to be working as a truant officer. Farley admitted working at the corporation during school hours on at least 100 days for both school years 2009-2010 and 2010-2011. He also admitted that during school year 2009-2010, he worked full days on approximately seven days at the corporation’s Tampa facility when the Elizabeth schools were in session and he was being paid to perform his work as a truant officer. In total, over the course of the two school years, Farley logged more than 250 hours at the corporation’s facilities during hours when he was being paid to perform duties on behalf of the EBOE.

The charge to which Farley pleaded guilty carries a maximum potential penalty of 10 years in prison and a $125,000 fine. As part of his plea agreement, Farley agreed to pay $22,065 in restitution to the Elizabeth Board of Education, reflecting the hours for which he was being paid to perform his duties as an attendance liaison officer but was actually working for the corporation.  Sentencing is scheduled for August 6, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and investigators with the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace Park, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Mark J. McCarren of the U.S. Attorney’s Office in Newark and Assistant Prosecutor Robert Vanderstreet with the Union County Prosecutor’s Office.

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Defense counsel: Timothy R. Smith and Wolodymyr Tyshchenko Esqs., Fairfield, N.J.

Farley, Scott Information

NEWARK, N.J. – Somerset Medical Center – a regional medical center located in Somerville, N.J. – has paid $435,640 to settle allegations that it violated the federal False Claims Act by making improper rental payments to a cardiology group that referred large numbers of patients to the hospital, New Jersey U.S. Attorney Paul J. Fishman announced today.

The civil settlement agreement is between the United States of America – acting through the U.S. Attorney’s Office for the District of New Jersey and on behalf of the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) – and Somerset Medical Center.

“Making inflated rental payments to induce referrals is no better than slipping a doctor an envelope stuffed with cash,” U.S. Attorney Fishman said. “Kickback arrangements undermine the physician-patient relationship and can lead to unnecessary treatment and higher costs. There is no room in our healthcare system for hospitals that abuse federal health care programs to boost their bottom line.”

“Today’s settlement reaffirms our commitment to investigate all matters relating to kickbacks and inducements, which have no place in the healthcare arena,” Special Agent in Charge Tom O’Donnell from the U.S. Department of Health and Human Services Office of Inspector General said.

According to the contentions of the United States contained in the settlement agreement:

From Oct.1, 2006, to Sept. 30, 2013, Somerset paid Medicor Cardiology, a practice based in Hillsborough, N.J., rental amounts that were above fair market value for the leased space. The cardiology practice was a significant source of patient referrals to Somerset.

At least one purpose of the payments was to induce the referral of patients to Somerset, and they were successful. Somerset’s subsequent billings of the Medicare program for services resulting from those tainted referrals were therefore false claims in violation of federal anti-kickback and self-referral laws.

 Somerset has agreed to pay $435,640, which includes interest, to the United States to settle the federal civil claims. The settlement resolves allegations against Somerset in a False Claims Act suit that was brought by two formerSomerset employees, a physician and an administrator.

The whistleblower – or qui tam – provisions of the federal False Claims Act permit private individuals, known as relators, to file such whistleblower actions and share in a portion of the proceeds recovered by the federal government.

U.S. Attorney Fishman credited special agents of HHS-OIG, under the direction of Special Agent in Charge O’Donnell, for the investigation leading to today’s settlement.

The government is represented by Assistant U.S. Attorney Charles Graybow of the U.S. Attorney’s Office Health Care and Government Fraud Unit.

The claims settled by these agreements are allegations; there have been no admissions of liability.

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 $535 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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Counsel for Somerset Medical Center: Jack Wenik Esq., Newark
Counsel for Relators: John E. Riley Esq., Philadelphia

Somerset Medical, Executed Settlement Agreement

NEWARK, N.J. – Two Elizabeth, N.J., women were each sentenced today to prison for conspiring to commit bank fraud by depositing more than half a million dollars in counterfeit checks into different TD Bank accounts, U.S. Attorney Paul J. Fishman announced.

Latisha White, 29, was sentenced to 26 months in prison and Synethia Bland, 30, was sentenced to 24 months in prison. Both women previously pleaded guilty before U.S. District Judge William J. Martini to one count of bank fraud conspiracy in the superseding indictment against them. Judge Martini imposed the sentence today in Newark federal court.

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

From October 2009 to May 2012, White created counterfeit checks on her computer using commercially available check-writing software. White and Bland deposited the counterfeit checks into multiple accounts at TD Bank. Bland recruited others to use their own accounts or open new accounts to deposit the counterfeit checks.

White and Bland employed a variety of methods to withdraw the fraudulent funds, including making ATM cash withdrawals, submitting cash withdrawal slips and making debit card purchases on merchandise and postal money orders.

White and Bland each admitted they arranged the deposit of more than 150 counterfeit checks into more than 120 different bank accounts. They also each admitted that they deposited counterfeit checks that totaled more than $500,000.

In addition to the prison term, Judge Martini sentenced White and Bland to each serve three years of supervised release and to forfeit $225,000 each. Restitution is still being determined.

U.S. Attorney Fishman credited special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; postal inspectors, under the direction of Inspector in Charge Maria L. Kelokates; and investigators at the Union County Prosecutor's Office, under the direction of Acting Prosecutor Grace H. Park, and the Morris County Prosecutor's Office, under the direction of Acting Prosecutor Fredric M. Knapp.

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

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Defense counsel:

Bland: Rubin Sinins Esq., Springfield, N.J.
White: Ruth Liebesman Esq., Paramus, N.J.

NEWARK, N.J. - A resident of Florida and Ohio was sentenced to 37months in prison today for his role in defrauding a charter flight company and other merchants of hundreds of thousands of dollars in luxury goods and services, U.S. Attorney Paul J. Fishman announced.

Dante G. Dixon, 46, of Miami, Fla., and Akron, Ohio, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with conspiracy to commit wire fraud. Judge Martini imposed the sentence – which will run consecutively to a one-year sentence previously imposed by U.S. District Judge Dickinson R. Debevoise for a violation of supervised release – today in Newark federal court.

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

From May through June of 2013, Dixon and others conspired to fraudulently obtain at least three private charter flights from Jet Aviation – an international business aviation services company with U.S. headquarters in Teterboro, N.J. – as well as tens of thousands of dollars in other luxury goods and services. Dixon and others used sham lines of credit issued to a well-known financial institution, of which they claimed to be employees.

On May 5, 2013, an individual using the name “Josh Stevens” called Jet Aviation's offices in Chicago, Ill., and Van Nuys, Calif., to inquire about its private charter flight services.  He identified himself as a senior vice president at the financial institution and provided a supposedly affiliated email address, to which a Jet Aviation employee sent a draft charter services agreement. The agreement was signed by “Josh Stevens” and returned to Jet Aviation on May 9, 2013, falsely listing “Josh Stevens” as a senior vice president and Dixon as a vice president. The aviation company established an account and a line of credit for $350,000, which Dixon and others used to take private charter flights.

As a result of their misrepresentations to Jet Aviation, Dixon and others fraudulently obtained private high-end charter flights and limousine car services, with a total value of $175,790, for which Jet Aviation never received payment.

Dixon and others made similar misrepresentations about their purported employment at the financial institution to other luxury service providers and obtained approximately $20,000 in luxury watches, sunglasses, sterling silver and leather business cardholders, and approximately $25,500 in hotel stays at a luxury hotel in Miami.

As a result of their scheme, Dixon and others fraudulently obtained more than $220,000 in luxury goods and services.

In addition to the prison term, Judge Martini sentenced Dixon to three years of supervised release and ordered him to pay restitution of $220,957.

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.

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

This case was coordinated with 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 is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the Task Force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. 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.

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Defense counsel: Lorraine Gauli-Rufo Esq., Verona, N.J.

NEWARK, N.J. – Former Jersey City Council candidate Lavern Webb-Washington today admitted illegally using contributions to her political campaign for her personal use, U.S. Attorney Paul J. Fishman announced.

Webb-Washington, 65, of Jersey City, N.J., pleaded guilty before U.S. District Judge Jose L. Linares to a superseding information charging her with converting to her own use and the use of another up to $1,000 in money of the United States to which she was not entitled.

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

As a 2009 candidate for city council in Jersey City, Webb-Washington had a duty truthfully to account to her campaign for contributions received and to not use campaign contributions for any improper purpose, such as for personal use. On March 30, 2009, April 23, 2009, and May 7, 2009, in Bayonne, N.J., and North Bergen, N.J., Webb-Washington accepted cash contributions from Solomon Dwek, a witness cooperating with federal law enforcement agents. Webb-Washington accepted those contributions with the intent to convert a portion of the money to her own use without authority and contrary to New Jersey state laws governing the proper use of campaign contributions. She failed to report these cash contributions to the N.J. Election Law Enforcement Commission (ELEC) as required and used up to $1,000 of that money to pay her own personal expenses. The funds that Webb-Washington admitted converting were federal funds given to Dwek by the FBI as part of the investigation.

The misdemeanor charge to which Webb-Washington pleaded guilty carries a maximum potential penalty of one year in prison and a $100,000 fine. Webb-Washington had been facing a mail fraud charge, which according to the plea agreement, will be dismissed at the time of her sentencing. Sentencing is scheduled for August 5, 2014.

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

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

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Defense counsel: Wanda M. Akin Esq., Newark

Webb-Washington, Lavern Superseding Information

CAMDEN, N.J. – Two Philadelphia men are scheduled to appear in court today on charges of conspiracy, murder for hire and aiding and abetting the use of a firearm related to a shooting in Atlantic City, N.J., last year, U.S. Attorney Paul J. Fishman announced.

Ronald Galati, 63, and Jerome Johnson, 45, will have their initial court appearances before U.S. District Judge Joseph H. Rodriguez in Camden federal court. They were each charged in an indictment – returned by a federal grand jury on April 2, 2014, and unsealed today – with conspiring with Ronald Walker, 48, of Philadelphia, and Alvin Matthews, 46, of Brookhaven, Pa., to shoot and kill an individual in Atlantic City, N.J., on Nov. 30, 2013. Johnson was also charged with transporting a firearm for use during the commission of a felony, transferring a firearm for use in a crime of violence and being a previously convicted felon in possession of a firearm.

According to documents filed in this case and statements made in court: Galati owned and operated American Collision & Automotive Center (American Collision) in Philadelphia. At various times, Johnson has worked there for Galati. Prior to June 2013, Galati allegedly began saying he was going to kill a person identified as “Victim One.”  In June 2013, Galati, members of Galati’s family and associates of Galati had dinner with Victim One at a restaurant in Northfield, N.J. During dinner, Galati took Victim One into the kitchen and threatened to kill him.

Galati and Johnson allegedly approached Walker and Matthews and asked them to kill Victim One in a way that would not implicate Galati. Galati promised to pay Walker and Matthews to shoot and kill Victim One.

Galati provided Walker and Matthews with several addresses associated with Victim One, including an address in the vicinity of Broad and Snyder streets in Philadelphia. In November 2013, in an attempt to find and kill Victim One, Johnson took Walker and another individual to Victim One’s home in Philadelphia.  Finding the home empty, the other individual broke into Victim One’s home and vandalized it while Walker waited outside.

On Nov. 29, 2013, Johnson gave Matthews a Colt .25 caliber semi-automatic handgun.  The next day, Johnson telephoned Walker and Matthews and arranged to meet them. At some point Galati called Johnson and told him that Victim One was in New Jersey. Johnson drove Walker and Matthews to Atlantic City and told them if there was a woman with Victim One, she was not to be harmed. While in Johnson’s vehicle, Matthews gave Walker the handgun he received from Johnson the day before. Johnson then dropped Walker and Matthews off around the corner from Victim One’s home.

When Victim One and a woman came out of a house, Walker and Matthews approached them and Walker shot Victim One with the Colt .25 caliber semi-automatic handgun, striking Victim One multiple times. The victim survived the shooting.

The count of conspiracy to commit murder for hire (Count 1) and the murder-for-hire count (Count 3) each carry a maximum potential penalty of 20 years in prison and a $250,000 fine.  The count of conspiracy to possess and use a firearm during a crime of violence (Count 2) carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The count of aiding and abetting the possession and use of firearm during a crime of violence (Count 4) carries a mandatory minimum consecutive prison sentence of 10 years and maximum of life and a $250,000 fine. 

The additional counts with which Johnson is charged, knowingly transporting a firearm for use during the commission of a felony (Count 5), knowingly transferring a firearm for use in a crime of violence (Count 6) and being a previously convicted felon in possession of a firearm (Count 7), each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.

On March 17, 2014, Matthews and Walker pleaded guilty before U.S. District Judge Joseph H. Rodriguez to a three-count information charging them with conspiracy to use interstate commerce facilities in the commission of a murder for hire; use of a firearm, and aiding and abetting the use of a firearm, in furtherance of a crime of violence, and with being a previously convicted felon in possession of a firearm. Matthews’ and Walker’s sentencings are schedule for June 30, 2014.

U.S. Attorney Fishman credited special agents of the FBI under the direction of Special Agent in Charge Aaron T. Ford; special agents of the ATF, under the direction of Special Agent in Charge Robin Shoemaker; and detectives of the Atlantic City Police Department, under the direction of Chief Henry White, for the investigation the case. He also thanked the Philadelphia District Attorney’s Office, under the direction of District Attorney R. Seth Williams, detectives of the Philadelphia Police Department, under the direction of Commissioner Charles Ramsey; and troopers of the Pennsylvania State Police, under the direction of Commissioner Frank Noonan, for their assistance.

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

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Defense counsel: Galati: Anthony Voci Esq. Philadelphia
Johnson: TBD

Galati, Ronald, and Johnson, Jerome Indictment

Also Ordered to Forfeit More than $2 Million

NEWARK, N.J. - A radiologist who owned and operated a diagnostic testing center in Orange, N.J., was sentenced today to 46 months in prison and ordered to forfeit more than $2 million for overseeing a sprawling cash-for-patients scheme to bribe doctors for testing referrals, U.S. Attorney Paul J. Fishman announced. 

Ashokkumar Babaria, 64, of Moorestown, N.J., previously pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging him with one count of offering and paying doctors and other health care providers illegal cash kickbacks for patient referrals in violation of the federal health care anti-kickback statute. Judge Cecchi imposed the sentence today in Newark federal court.

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

Babaria, then a licensed radiologist, was the medical director and owner of Orange Community MRI LLC (Orange MRI). The facility provided diagnostic testing services, such as MRIs, CAT Scans, ultrasounds, echocardiograms and dual-emission X-ray absorptiometries, known as “DEXA Scans.” From 2008 through 2011, Orange MRI made nearly $2 million in corrupt revenues from Medicare and Medicaid billings for tests performed on patients who were referred to Orange MRI by doctors who were paid cash kickbacks for those referrals.

Babaria negotiated, approved and paid kickbacks to physicians for each diagnostic test referred and provided cash to his subordinates to do the same. During his guilty plea proceeding, Babaria admitted to several specific acts, including his 2009 approvals of kickback arrangements to pay one doctor roughly $100 for each of his MRI referrals and another doctor $75 for each MRI referral and $25 for each ultrasound or DEXA scan referral. 

In addition to the prison term, Judge Cecchi sentenced Babaria to three years of supervised release, ordered him to forfeit $2,014,601 and fined him $25,000.

To date, 17 individuals have been convicted as a result of the investigation. Including Babaria, 15 people have pleaded guilty and two doctors were convicted at trial: Chikenzie Onyenso, 55, of Randolph, N.J., on Oct. 15, 2013, and Maryam Jafari, 43, of Hoboken, on Feb. 4, 2014.

Fourteen health care providers have agreed to forfeit a total of $370,960 in illegal kickbacks. Former Orange MRI executive director Chirag Patel, 38, of Warren, N.J., agreed to forfeit an additional $89,180 in corrupt gains.

U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, as well as criminal investigators from the U.S. Attorney’s Office, for the investigation.
  
The government is represented by Deputy Chief Scott B. McBride of the U.S. Attorney’s Economic Crimes Unit and Deputy Chief Joseph G. Mack of the U.S. Attorney’s Office’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 $535 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: Joseph D. Mancano Esq., Philadelphia

NEWARK, N.J. - A Union City, N.J., man who operated a supposed charitable organization, or “gemach,” admitted today that he ran it as an unchartered bank, accepting millions of dollars in deposits – including nearly $1 million of his own money – which he shielded from state or federal regulation, U.S. Attorney Paul J. Fishman announced.

Moshe Schwartz, 33, a/k/a “David Schwartz” or “Gedalya David Schwartz,” pleaded guilty to two counts of an information: operating an unchartered bank and aiding and assisting in the filing of a false 2007 tax return. Schwartz entered his guilty plea before Judge Jose L. Linares in Newark federal court.

According to the information and statements made in court: Schwartz operated Gemach Shefa Chaim (GSC), purportedly to provide interest-free loans to needy members of the Sanz community in Union City. During his guilty plea proceeding, Schwartz admitted he operated GSC as a bank, with millions of dollars in deposits and more than 350 client accounts by July 2009.  

To operate a bank in the United States, a bank is required to obtain a charter from the United States or the state in which the bank operates. Chartered banks are subject to oversight, regulation, and periodic review by federal and state authorities. Neither Schwartz nor GSC had such a charter.

Schwartz admitted that, in operating GSC as a bank, he accepted deposits and credited clients’ accounts, wrote checks from GSC as directed by clients, made transfers between accounts, disbursed client funds upon request, negotiated GSC checks presented by persons other than the named payees, conducted wire transfers, provided clients with receipts of transactions, charged clients a fee for bounced checks and provided overdraft notices to clients.  Schwartz also admitted that he opened and maintained various bank accounts at financial institutions in or around North Jersey in the name of GSC and used those institutions to deposit client funds, negotiate checks, provide clients with GSC checks and conduct wire transfers. Because client funds were deposited into and commingled within GSC’s bank accounts at financial institutions, the funds could only be traced back to GSC, thereby concealing the true ownership, nature and source of the funds. Many clients were thus able to use their GSC accounts to engage in suspicious and, at times, illegal activities, including evading federal taxes and money laundering. 

Schwartz also admitted that he provided false and fraudulent information to his tax preparer in Union City concerning his income for tax year 2007, falsely representing that his income was $24,475 when it was approximately $208,845. Schwartz admitted that he used his own GSC account and a false identity to conceal his income and assets from the IRS, causing a $74,889 tax loss. 

The banking offense to which Schwartz pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. The tax offense to which Schwartz pleaded guilty carries a maximum potential penalty of three years in prison and a $250,000 fine.  Schwartz is scheduled to be sentenced on July 30, 2014.

GSC bank accounts were seized in July 2009 and approximately $500,000 was ultimately forfeited. The accounts had been used by Moshe Altman, 44, Itzak Friedlander, 46, and Shimon Haber, 38, to launder proceeds that cooperating witness Solomon Dwek, 41, had purported to be the proceeds of illegal activities. Altman pleaded guilty in December 2010, to, among other things, conspiring to launder monetary instruments and was sentenced in March 2011 to 41 months in prison. Friedlander pleaded guilty in April 2010 to conspiracy to launder monetary instruments and was sentenced in April 2011 to 24 months in prison. Haber pleaded guilty to the same charge in January 2010 and was sentenced in May 2010 to five months in prison. 

U.S. Attorney Fishman 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 guilty plea; as well as the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the Federal Deposit Insurance Corporation-Office of Inspector General, under the direction of Special Agent in Charge A. Derek Evans; and the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan, for their assistance.

The government is represented by Assistant U.S. Attorneys Maureen Nakly of the U.S. Attorney’s Special Prosecutions Division and Frances C. Bajada of the office’s Criminal Division.

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Defense counsel: Ricardo Solano Esq., Newark

Schwartz, Moshe Information

TRENTON, N.J. – An Ocean County, N.J., man today admitted forging and transmitting documents to evade a federal tax lien, U.S. Attorney Paul J. Fishman announced.     

Charles W. Jarvis, 59, of Toms River, N.J., pleaded guilty today before U.S. District Judge Mary L. Cooper in Trenton federal court to an information charging him with one count of corruptly endeavoring to impede and impair the administration of the Internal Revenue Code.

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

In 2012, Jarvis and his wife incurred a federal tax liability of $76,676 due to insufficient tax withholdings in 2009 and 2010. The IRS filed a tax lien against a piece of property that Jarvis’ wife had inherited from her deceased mother’s estate. Jarvis’ wife then contracted to sell the property to a third party, but could not transfer title due to the tax lien. Jarvis forged a “Notice of Tax Lien Release” and a letter purportedly from the IRS falsely claiming that the tax liability had been paid and the lien discharged. Jarvis sent the forged documents to the real estate attorney handling the sale of the property, who provided the documents to the title agent. The sale of the property closed even though the tax lien had not been satisfied.

The count to which Jarvis pleaded guilty carries a maximum potential penalty of three years in prison and a $5,000 fine. Sentencing is scheduled for August 7, 2014.

U.S. Attorney Fishman credited special agents of the Treasury Inspector General for Tax Administration, under the direction of Special Agent in Charge Robert M. Geary of the Philadelphia office, with the investigation leading to today’s guilty plea.

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

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Defense counsel:  Robert J. Bowman Esq., Voorhees, N.J.

Jarvis, Charles Information

TRENTON, N.J. – A Middlesex County, N.J., man who once worked as a school crossing guard was sentenced today to 216 months in prison for taking compromising photographs of a naked child and distributing them and hundreds of other photographs of child sexual abuse over the Internet, U.S. Attorney Paul J. Fishman announced.
                       
Kenneth Christensen, 45, of Edison, N.J., previously pleaded guilty before U.S. District Judge Peter G. Sheridan to information charging him with one count of production of child pornography and one count of distribution of child pornography. Judge Sheridan imposed the sentence today in Trenton federal court.
                                                           
According to documents filed in this case and statements made in court:

Christensen – who worked as a school crossing guard in Metuchen, N.J., prior to his arrest – admitted that in 2012, he sent four individuals emails containing several hundred images of child pornography, including sadistic and masochistic conduct. Christensen acknowledged he distributed more than 600 such images.

Christensen also admitted that some of the files he distributed were photographs he took himself, including in his own bedroom, of a naked, prepubescent child who was bound in some of the images.

In addition to the prison term, Judge Sheridan sentenced Christensen to lifetime supervised release and required him to register as a sex offender.

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

The government is represented by Assistant U.S. Attorney David M. Eskew of the U.S. Attorney’s Office General Crimes Unit in Newark.

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Defense counsel: K. Anthony Thomas Esq., Assistant Federal Public Defender, Newark

TRENTON, N.J. – A Mercer County, N.J., man was sentenced today to 210 months in prison for producing images of child sexual abuse by coercing a minor victim to stream explicit content to him over the Internet, U.S. Attorney Paul J. Fishman announced.

Fredy Arbito, 31, of Hightstown, N.J., previously pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with one count of production of child pornography. Judge Shipp also imposed the sentence today in Trenton federal court.

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

During his guilty plea proceeding, Arbito admitted that between July 2011 and January 2013, he made contact with a young girl over a video chat messaging system and coerced her to engage in sexually explicit conduct for the purpose of transmitting it live over the Internet. Arbito also admitted keeping copies of the video on his own computer.

Arbito was initially charged with possession of child pornography, apprehended by local authorities in Panama and returned to the United States where he was arrested by special agents of Department of Homeland Security’s Immigration and Customs Enforcement, Homeland Security Investigations (HSI) in April of 2013.

In addition to the prison term, Judge Shipp also sentenced Arbito to serve a lifetime of supervised release. Arbito is also required to register as a sex offender.

U.S. Attorney Fishman praised special agents of the HSI, under the direction of Special Agent in Charge Andrew M. McLees, with the investigation.

The government is represented by Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office Criminal Division in Trenton.
                                                
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Defense counsel: James R. Lisa Esq., Jersey City, N.J.

NEWARK, N.J. – A woman who allegedly robbed three banks in three-week span has been charged federally in connection with the spree, U.S. Attorney Paul J. Fishman announced.

Valeria Parziale, 34, of Harrison, N.J., is charged by complaint with three counts of bank robbery in connection with two robberies in Newark and one in Harrison in January and February of 2014. She was arrested by the Newark Police Department and charged on Feb. 24, 2014, by the Essex County Prosecutor’s Office with related crimes. The U.S. Attorney’s Office is adopting the case for federal prosecution.

Parziale is expected to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

According to the complaint filed in this case:

Parziale robbed a Valley National Bank in Harrison on Jan. 30, 2014; a Wells Fargo bank in Newark on Feb. 14, 2014; and a Popular Community Bank in Newark on Feb. 20, 2014. During each robbery, Parziale handed the teller a note demanding cash and threatening to use a gun.

Parziale’s notes contained threatening language including, “I Have A Gun! Don’t Be Stupid!” She wore sunglasses and a wig to commit the Newark Wells Fargo robbery and a dark, hooded jacket and gloves to the bank in Harrison.

Each of the bank robbery charges carries a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to the arrest and charges. He also thanked the Newark, Kearny and Harrison Police Departments for their excellent work in this case.

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

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

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

Parziale, Valeria Complaint

Defendant and Conspirators Netted $1.4 Million in Illicit Profits over Five Years

NEWARK, N.J. - A former executive of a pharmaceutical technology firm was sentenced today to 16 months in prison for playing a central role in an insider trading scheme that repeatedly exploited non-public material information for financial gain, U.S. Attorney Paul J. Fishman announced.

John Lazorchak, 43, of Long Valley, N.J., previously pleaded guilty before U.S. District Judge Katharine S. Hayden to a six-count information charging him with one count of conspiracy to commit securities fraud and five counts of securities fraud. Judge Hayden imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: Lazorchak was director of financial reporting at Celgene Corp., a global pharmaceutical company based in New Jersey. Mark Cupo, 53, of Morris Plains, N.J., a friend and former boss of Lazorchak, held a similar position at Sanofi-Aventis, another New Jersey-based global pharmaceutical company. Another conspirator, Mark Foldy, 44, of Morris Plains, a friend and high school classmate of Lazorchak, was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey.

In their respective positions, Lazorchak, Cupo, and Foldy became privy to certain material information, including merger and acquisition plans, and – with respect to Lazorchak – quarterly earnings results and decisions on regulatory applications, before such information was made public.

From 2007 to 2012, Lazorchak regularly disclosed non-public information about Celgene’s anticipated corporate acquisitions, numerous quarterly earnings results, and regulatory news to Cupo with the expectation that Cupo would pass the information to a “friend” who would trade in the securities of Celgene or its target acquisition companies and then share the profits with Lazorchak and Cupo. 

There were, in fact, two “friends” to whom Cupo passed non-public material information: Lawrence Grum, 50, of Livingston, N.J., and Michael Castelli, 50, of Morris Plains, N.J. Both Grum and Castelli traded on the inside information and made more than half a million dollars in profits apiece. Grum and Castelli also passed certain Celgene inside information to friends and family members.

Lazorchak funneled information about Celgene’s anticipated acquisition of Pharmion Corp. in 2007 to his high-school friends, Foldy and Michael Pendolino, 44, a New Hampshire-based chiropractor. In the months leading up to the deal, Foldy and Pendolino traded on the inside information for a profit and broadened the insider trading network by tipping family members and other friends.

In May 2010, Lazorchak informed Cupo of Celgene’s then-confidential plans to acquire Abraxis BioScience Inc. After receiving the information from Cupo, Grum and Castelli purchased Abraxis stock and sold it immediately after the June 30, 2010, acquisition announcement. Grum and Castelli collectively made more than $150,000 in profits and paid thousands of dollars in cash to Cupo, to be shared with Lazorchak.

Between February and March 2011, Foldy informed Lazorchak of Stryker’s then-confidential plans to acquire Orthovita Inc. as payback for the Pharmion deal back in 2007.  Foldy also tipped other friends and family members about the Orthovita deal.

Lazorchak passed the Orthovita tip to Pendolino and Cupo. Pendolino not only traded on the Pharmion-related inside information himself, but also passed it on to another high school friend. Cupo gave the information to Grum and Castelli, who traded for substantial profits and gave a cash portion back to Cupo, for distribution amongst Cupo, Lazorchak, and Foldy.

Over the course of the five-year scheme, the conspirators collectively reaped more than $1.4 million in illicit profits by trading ahead of at least 11 corporate news events that Lazorchak or Cupo revealed to them prior to public announcement.

In addition to the prison term, Judge Hayden sentenced Lazorchak to two years of supervised release and ordered him to forfeit $3,000.

Lazorchak is the fifth defendant charged with participating in this insider trading network to be sentenced. On April 9, 2014, Grum was sentenced to one year and one day in prison and Castelli was sentenced to nine months in prison. On April 16, 2014, Cupo was sentenced to 16 months in prison and Foldy was sentenced to two years of supervised release with six months of home confinement and electronic monitoring. The sixth and final charged defendant, Michael Pendolino, is scheduled to be sentenced by Judge Hayden on May 5, 2014.

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 sentences. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel M. Hawke.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

Today’s sentencing 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.

14-140                                                

Defense counsel: John Lazorchak:  Lawrence S. Lustberg Esq. and Amanda B. Protess, Esq., Newark
Mark Cupo:  Joseph J. Bell Esq. and Joseph J. Bell, IV Esq., Rockaway, NJ
Lawrence Grum:  Scott A. Resnik Esq., New York
Michael Castelli:  Daniel Zinman Esq. and Daniel Stein Esq., New York
Mark Foldy:  Jonathan Marks Esq., New York
Michael Pendolino:  James S. Friedman Esq., Newark                                                           

NEWARK, N.J. – A Middlesex County, N.J., man today admitted his role in a large-scale mortgage fraud scheme that caused millions of dollars in losses, U.S. Attorney Paul J. Fishman announced.

Delio Coutinho, 71, of Colonia, N.J., pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with conspiracy to commit wire fraud.

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

From March 2008 through June 2012, Coutinho and his co-defendants conspired with each other and others to release liens on encumbered properties via fraudulently arranged short sale transactions. This allowed Coutinho and his co-defendants to profit from new fraudulent mortgage loans obtained on the properties from other mortgage lenders. To complete the short sale transactions, Coutinho and his co-defendants submitted materially false closing and other documents to mortgage lenders. They submitted fraudulent mortgage loan applications to lenders to obtain new loans on properties in and around Elizabeth, N.J., including a property on Fulton Street.

Coutinho was a loan officer at a northern New Jersey mortgage brokerage company, and he submitted false documents in support of the schemes. Co-defendants included Jose Luis Salguero Bedoya, 37, of Elizabeth, a real estate investor who, along with his girlfriend, Yazmin Soto-Cruz, 33, of Elizabeth, provided much of the funds used by the defendants to perpetuate their fraudulent schemes. Christopher Ju, 28, of Edison, N.J., negotiated the fraudulent short sale real estate transactions. In all, Coutinho and the others obtained approximately $2 million in illegal mortgage proceeds.

The conspiracy count to which Coutinho pleaded guilty carries a maximum potential penalty of 30 years in prison and a $100,000 fine.

U.S. Attorney Fishman credited the FBI Newark Mortgage Fraud Task Force, which includes special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; special agents of the U.S. Housing and Urban Development, Office of Inspector General, Northeast Region of Investigations, under the direction of Special Agent in Charge Christina Scaringi; special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Inspector General Michael P. Stephens; special agents of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), under the direction of Special Inspector General Christy L. Romero; special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano Gregory, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Lakshmi Srinivasan Herman of the U.S. Attorney’s Office Economic Crimes Unit in Newark, and Charlton A. Rugg of the Narcotics/OCDETF Unit.

Today’s guilty plea is part of efforts 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.

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Defense counsel:  Michael A. Robbins Esq., West Orange, N.J.

Coutinho, Delio Information

NEWARK, N.J. – An Essex County, N.J., woman was sentenced today to 79 months in prison for a credit card fraud and identity theft scheme in which she targeted elderly women, U.S. Attorney Paul J. Fishman announced.

Terrell Brunson, 40, of Newark, N.J., previously pleaded guilty before U.S. District Judge Anne. E. Thompson in Trenton federal court to an indictment charging her with access device fraud and aggravated identity theft. Brunson was sentenced to 51 months on the access device fraud count, followed by 24 consecutive months on the aggravated identity theft count and four consecutive months for violating her supervised release.

According to documents filed in this case and statements made in court: From April 2012 through February 2013, Brunson engaged in an identity theft and credit card fraud scheme that specifically targeted elderly women. She searched through publicly available directories for telephone numbers of individuals who she believed, based upon their names, were elderly women. One name that Brunson commonly sought out was “Ruth.” Brunson called these individuals and pretended to be someone else, such as a representative from a credit card company. She then solicited personal information from these women (Social Security numbers and dates of birth) and then contacted credit card companies and used the information to add herself as an authorized user to the victims’ accounts or to create new accounts. 

On July 3, 2012, a woman identified as “Victim One” received a telephone call from Brunson, purporting to be a representative of MasterCard. Brunson inquired about an alleged $400 transaction that she claimed Victim One had made at a Wal-Mart store. Victim One informed Brunson that the Wal-Mart transaction was fraudulent and provided her Social Security number, date of birth, and mother’s maiden name. Brunson then used Victim One’s personal information to open two retail store credit card accounts and to access one of Victim One’s current credit card accounts. Brunson then used these accounts to make thousands of dollars’ worth of purchases online and in person at various stores and restaurants in New Jersey.

On Dec. 14, 2007, Brunson was arrested in a similar scheme and was and charged with access device fraud in federal court. While on pretrial release in connection with these charges, Brunson continued the scheme and fraudulently obtained additional identities and access to the credit card accounts of others. Brunson pleaded guilty to a two-count information and on April 2, 2009, U.S. District Judge Anne E. Thompson sentenced her to 39 months in prison, followed by three years of supervised release. Brunson committed the present offenses while on supervised release.

In addition to the prison term, Judge Thompson sentenced Brunson to three years of supervised release, entered a judgment of forfeiture in the amount of $10,894 and ordered Brunson to pay restitution of $7,069. 

U.S. Attorney Fishman credit special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola, for the investigation leading to today’s sentence.

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

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Defense counsel: Muhammad I. Bashir Esq., Elizabeth, N.J.

ST. PETER’S UNIVERSITY, JERSEY CITY, N.J.

Thank you, Jim [McGreevey], for that very nice introduction. And thank you to both you and Mayor Fulop for having the vision and commitment to organize this conference and for bringing us all together. The program looks incredible and my only regret is that my schedule won’t allow me to stay after my speech. But this topic is so critical and so central to the mission of my office that I am honored for the opportunity to kick off the program by highlighting what the Justice Department is doing across the country and, in particular, here in federal court in New Jersey.

Every other Tuesday at 5:00 in the afternoon, about two dozen people come to a courtroom on the second floor of the Martin Luther King Jr. Federal Courthouse in Newark.  At first, it looks like a lot of other proceedings in that courthouse. A federal Magistrate Judge, Judge Madeline Cox Arleo, sits on the bench. In what we call the well of the courtroom, at the two tables usually occupied by lawyers or their clients, there are a couple of lawyers from the federal Public Defender’s Office; four people from the U.S. Attorney’s Office; and at least one or two probation officers. Behind them, sitting on the benches usually occupied by spectators, are about 15 other people.

But this proceeding is different. Everyone on the benches has very recently left federal prison – some with a stop at a halfway house, others directly from jail. And one by one, each of them is called to the front of the courtroom and sits down at one of the tables to talk to the judge. “How is your daughter,” she asks one. “Tell me about your new apartment,” she inquires of another. “Can we help you print your resume?” “Do you want a lawyer to help you get a payment plan so you can get your driver’s license back?” “Do you have to leave early today to get to class?” And, finally, “What do you need?”

And as you listen to her questions, and hear the answers, and watch the interaction among all of those people, you begin to realize there is something very special, and really inspiring, going on in Courtroom 2A.

The last time those defendants were in that courthouse, lawyers from my office were asking another judge to send them to prison for a substantial period of time. The last time those defendants were in that courthouse, a different judge explained why the things they had done and the crimes they had committed required that they receive a meaningful term of incarceration.

Now when they walk in, members of my office and court personnel are editing their resumes, teaching them how to interview for a job, and offering to tutor them in math. The judge is helping them to register for college, find apartments, and get jobs – and is literally taking them to a charter school to help them enroll their kids. Now that they have served their time, those defendants are being asked by lawyers and staff from that same U.S. Attorney’s office and by a federal judge working with probation officers and public defenders, “What do you need?”

How did we get here? And is there an inconsistency in our approach?

The answer is “no.” We have a crisis in this country. Our federal and state prisons currently house 1.5 million people. Hundreds of thousands more are in local jails. In all, we estimate that more than 1 in 100 adults are behind bars. More than 200,000 are in the custody of the federal Bureau of Prisons, and it is my job, and the job of the people who work in my office, to put several hundred more there every year. In my judgment, they have committed crimes for which jail is the appropriate punishment.

But for almost all of them, their incarceration doesn’t and shouldn’t last forever. More than 95 percent of federal prisoners will be released and, when they are, the overwhelming majority go home – or somewhere near where they once called home. And it is on that journey and at its destination that they may well fail if they don’t have help.

Many come back to families that are barely intact, if they are there at all. Housing is hard to find, and jobs even tougher. It’s hard enough in today’s economy for lots of people without criminal records to find work, and here we’ve been particularly slow to recover. Imagine what it’s like for those just out of prison to compete in that environment.

And then add in the educational obstacles. Of the 20 fastest growing occupations, 13 require postsecondary education. But only 22 percent of prisoners have any postsecondary experience, compared to more than half of the rest of us. Two in five prison and jail inmates – 40 percent – lack a high school diploma or its equivalent.

Even when ex-offenders get a job, they face an uphill battle. A report from the Pew Charitable Trusts found that past incarceration reduced subsequent wages by more than 10 percent, cut annual employment by more than two months and reduced yearly earnings by 40 percent.

And it turns out that the ability to find a job after being released from prison is one of the greatest predictors of success on the outside. But without the foundations that the rest of us work so hard to build and maintain – the things that quite frankly we sometimes take for granted – the recently released are often alone, tempted by their past lives, sometimes still on the hook of an addiction, and too frequently with too few alternatives to falling, or stumbling, back into a life that they want to avoid if they can.

So it’s hardly surprising that so many fail. In fact, nationally, two out of every three people released from state prisons will be arrested again within three years of their release. Half of those released will end up back in prison in that time. Released federal prisoners do a little better:  they have a 40 percent chance of being re-arrested or having their supervision revoked – which would send them back to prison in their first three years out.

These numbers and the realities they represent are daunting. With roughly 700,000 people coming out of our state and federal prisons every year, plus the millions that flow through jails at the local level, recidivism has terrible consequences for the lives of offenders and their families. It has serious, serious implication for public safety. And with resources already severely strained at the federal, state and local levels, it just costs too much money. The Bureau of Justice Statistics estimates that more than $74 billion is spent on federal, state and local corrections annually. And it costs nearly $30,000 to house a federal inmate for a year.

So how do we stop this terrible cycle?

At the national level, my boss, Attorney General Eric Holder, has convened a Federal Reentry Council to try to bring down the barriers that stop former prisoners from succeeding. The council comprises 20 federal agencies, all with common goals: to make our communities safer by reducing recidivism and victimization; to help those getting out to become productive citizens; and to save limited resources.

How do they do that? Part of it is just raising awareness. There are a huge number of misconceptions out there about the rights and obligations of those who have served time. Can they live in public housing? Yes. Can you get tax credits for hiring them? Yes. Can employers get bonded against theft?  Yes. And so, among other things, the Council has promoted and published on line a series of what they call “mythbusters,” answering those questions, among others.

Part of it is knocking down systemic barriers and obstacles that make it difficult for people who have already been held accountable and paid for their crimes to contribute productively and to support themselves, their families and the economy.

In April 2011, Attorney General Holder sent a letter to every state Attorney General citing a comprehensive study by the Justice Department and the American Bar Association cataloguing more than 38,000 statutes across the 50 states and other territories that impose collateral consequences on people convicted of crimes. Although some of those restrictions serve public safety, many impose unnecessary burdens – including denial of employment and housing opportunities – that cripple an individual trying to make a new start. So he asked the states to evaluate relevant laws and policies and he made the Department’s resources available to provide support. And we in the Department of Justice looked to our own house – conducting a review of federal collateral consequences identified in the study.

Early last year, also under the Attorney General’s direction, the Justice Department began a comprehensive review of the criminal justice system – including charging, sentencing, incarceration and reentry – to identify areas in which federal laws could be enforced more fairly and efficiently. The idea was to figure out which practices were more successful and which might actually be working against our goals.The resulting initial reform package – called the “Smart on Crime” initiative – is already driving us to reexamine our priorities, more fairly enforce laws and apply just punishments, strengthen protections for vulnerable populations and focus even more strongly on prevention and reentry.

The final piece is targeting services to the population we’re trying to reach. This has to start in jail. As the Director of the Federal Bureau of Prisons has pointed out, most federal inmates leaving prison need “job skills, vocational training, education, counseling, and other assistance such as drug abuse treatment, anger management, parenting skills, and linkage to community resources for continuity of care if they are to successfully reenter society.” In other words, today’s BOP realizes that reentry begins the day an inmate enters a facility, not the day the inmate leaves it.

And it must continue in halfway houses where many federal inmates begin their reintegration. But for too long, the policies and culture of those facilities were actually counterproductive in many ways. So just last month, Attorney General Holder announced that the Justice Department would require federal halfway houses – which saw 30,000 inmates go through their doors in just the past year – to enhance their treatment services. Those facilities will now have to provide a specialized form of treatment to prisoners, including those with mental health and substance abuse issues, provide greater assistance to inmates who are pursuing job opportunities – such as permitting cell phones to be used by inmates and providing funds for transportation – and expand access to equipment that allows more inmates to reenter society through home confinement.

But even that isn’t enough.  So here’s how we got to courtroom 2A: Three years ago, I asked people in my office – and then in the courthouse – if we could do better.  I asked if we had the resources – the time, the money, the commitment – to try something new. There were others who were already running or participating in reentry projects around the country, but we had never done it in federal court in New Jersey. Those conversations, and the hard work of a lot of people, led to the development of the first federal reentry court in New Jersey – what we call our “ReNew” program. That hard work, and most of all, the hard work of the program participants who have dedicated themselves to reimagining their lives – is why courtroom 2A is such a special place.

Because we know that it isn’t enough just to provide the right services; we must provide them at the right time in the right place. Former offenders are at a unique crossroad – poised to become law-abiding contributors or frequent flyers in the criminal justice system. They need to know the path of redemption is theirs to choose – and that they will be supported in their journey and their decision to leave what is familiar and trade it for the prospect of a better future.

To be clear, this isn’t a program for white-collar criminals who just did 18 months in a minimum security prison. The participants in our program were convicted of manufacturing and distributing of dangerous narcotics, selling and transporting firearms, and other very serious and dangerous crimes. They served years – in some cases 10 years or more – in federal prison and were predicted to be some of the most likely to reoffend.

Because of those challenges, it isn’t all smooth sailing. They have to work long hours at difficult jobs – sometimes more than one – and pursue challenging education and other programs to make progress. Some have family members who aren’t supportive and others have the wrong friends who want to reunite with their old buddies. Some just aren’t quite ready to turn away from their previous lives.

So, like everybody else, some of our participants make mistakes. There are excuses, impediments, and apologies. And there are sanctions. Some have to stay in the program for longer, losing credit. Some end up being directed to do some community service and others get some additional house arrest. But all of it – all of it – is geared toward getting these individuals back on their feet, ready and able to make it. And every two weeks, they remind us why this work is so important and they impress us with their ability to evolve and persevere.

Amare Terrell was a straight “A” student until, at around the age of 13, he began to rebel against his mother. He was sent to live with his paternal grandparents and with his father – a heroin addict who introduced him to the drug culture of the streets. He dropped out of high school, had a number of run-ins with the law, and in December 2008, was prosecuted by my office for conspiracy to distribute heroin.

Last year, he was one of the first to participate in our reentry court. Now, in front of Judge Arleo and the other participants, Mr. Terrell is leading in a different way. He obviously takes his role as a father seriously; he talks to the judge about his need for health insurance and a 401(k); and he is focused on what he needs to do to keep his life on track. A couple of months ago, right before one of the 700 snowstorms we had this winter, another participant told Amare that he was worried because he didn’t have any food in his house. And, as many of you know, grocery stores aren’t so plentiful in the urban parts of Essex County.  Mr. Terrell told him to meet him at the grocery store in 10 minutes, where he bought him $70 worth of groceries. And, with our encouragement, Mr. Terrell recently spoke to a group of people suspected of committing the worst crimes in a neighborhood and presented a powerful message about what he lost when he broke the law. Next month, Amare Terrell will be one of the first four to graduate from our program. We know how much that means to him, and we hope he knows how much that means to us.

Also graduating is Eddie Wilson. Eddie’s mother and father were intravenous drug users who died of HIV/AIDS. He was raised by his grandmother who also passed away when Mr. Wilson was still a teenager. He was prosecuted by my office for selling guns and ammunition to an undercover ATF agent.

From the start of reentry court, Mr. Wilson was focused on getting his college degree, which has led to his being called the “Professor” in court. But his dedication is clear. He lived in a shelter until he could save enough money to pay for an apartment. But he never seemed down.  When asked by the judge about his situation, he might say it was hard because he didn’t have any food. Or he might let her know that he had to be out of the shelter by 7:00 in the morning. But he would also say that it was probably good, because it made him get up to start studying. And the judge, encouraging his dedication, helped him to get a job at the college he attends.

Like Mr. Terrell, Mr. Wilson shows real ownership in this program. More than a few times, he has discovered and told us and the other participants about different programs that might help with rent payments or furniture. Through these efforts, he has probably taught the team as much about reentry as they have taught him.

Muhammed Shabbaz is one of the newest participants – he was released from a halfway house in mid-February. He also has the distinction of having served 14 years or so in prison – one of the longest sentences of anyone in the reentry court – for distribution of heroin and cocaine. In spite of that, or maybe because of it, he comes across in court as someone who is spiritual and has thought a great deal about how he wants to live his life and what comes next. He has a job, and has resumed a stable relationship with the woman to whom he was engaged when he went to prison. He has a facility for math, and will likely return to school to study accounting.

One side note on the extent to which our reentry court is full service: shortly after he joined the program, Mr. Shabbaz told the court that he had resumed living with his longtime girlfriend, and that they had had a religious wedding but weren’t formally married. Judge Arleo offered to perform the ceremony. He put her off. She offered again. And again. And again. She even offered to buy a cake. None of which is surprising if you know Judge Arleo.  Finally they set a date. He and his wife wrote their own vows. And one Tuesday evening, not so long ago, in Courtroom 2A, we all learned Mr. Shabbaz is not only good at math, but he’s also a bit of a poet.
 
Today, you will hear other stories from Judge Arleo, from Tom Eicher, the Chief of our Office’s Criminal Division, and perhaps from Mr. Terrel, Mr. Shabbaz, Mr. Wilson, or their colleagues. You will hear about their successes and their failures, their excitement and their despair. You will learn that, as much work as the reentry team does to find job opportunities, housing, furniture and even schools and daycare for their children, it is the participants themselves who direct and control their experience. It is our job, our responsibility, to give them the opportunity to do just that.

And it’s not just for them. As long as 1 in 28 children – and 1 in 9 African American children – go to bed each night with an incarcerated parent – as long as our kids are continuing the cycle of generational crime by embarking on lifetimes of involvement with the justice system – our work is not done.

I, and the people who work with me in the U.S. Attorney’s Office, understand that we will only succeed if we take a multifaceted approach to law enforcement. We understand the need, as Attorney General Holder, has said, to be smart on crime. We will never arrest our way out of the problems of crime. Only by emphasizing prevention and reentry, together with enforcement, do we have a chance to make a real and lasting impact on the violence and other issues that plague our communities.

On Monday night, I sat at my family’s Seder, and reflected on the ideas of redemption, of spiritual reawakening, of the rebirth that comes with spring – all themes of Passover. This Sunday, Christians will celebrate Easter, a holiday that celebrates many of the same ideas and hopes, and our collective ability to stretch beyond our limitations, to change ourselves for the better.
 
I, and the people who work with me on the ReNew court, understand that promise and we see it every day. No matter what our religion, we are a group that believes in second chances.
 
Redemption is about the triumph of hope over despair – the belief that we all have the potential for and the ability to change, and perhaps to do so dramatically, even if the road is hard. And even if we need someone like a judge to look us in the eye and ask: “What do you need?”

Thank you.

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NEWARK, N.J. - An Ocean County, N.J., man who was sentenced less than two months ago to 22 years in prison for running a Ponzi-style real estate scheme was indicted by a federal grand jury today on new charges of conspiracy, wire fraud and transacting criminal proceeds while on pretrial release, U.S. Attorney Paul J. Fishman announced.

Eliyahu Weinstein, 38, of Lakewood, N.J., was indicted on one count of conspiracy to commit wire fraud, five counts of wire fraud committed while on pretrial release, and seven counts of transacting in criminal proceeds. The government is seeking the seizure and forfeiture of all funds fraudulently obtained by Weinstein as a result of the scheme.

According the indictment and documents filed in this and other cases: Weinstein allegedly defrauded victims through three investment schemes: (1) pre-IPO shares of Facebook stock; (2) the purchase of an apartment complex in Florida; (3) the purchase of the mortgage notes on seven Florida condominiums. Weinstein and co-defendants Alex Schleider and Aaron Muschel, were originally charged by criminal complaint with the Facebook fraud in May 2013.
 
In February of 2012, Weinstein and his fellow conspirators allegedly offered a pair of investors (referred to in the indictment 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 they 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 alleged misrepresentations by Weinstein and his 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 convinced the Facebook victims to send the money by, among other things, providing them 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 and benefit by moving it through various accounts. Weinstein used some of the money to pay lawyers and experts representing him in his earlier – and at that time, still pending – criminal case and in related civil matters. Weinstein and his conspirators also used the Facebook victims’ money to make investments in a number of different businesses unrelated to Facebook, and to make loans for their own benefit.

Around the same time, Weinstein and his conspirators also persuaded the Facebook victims to invest in the purported purchase of an apartment complex, “Belle Glade Gardens,” in Florida. They falsely told the Facebook victims that Weinstein had the opportunity to purchase Belle Glade Gardens at a discounted price and immediately flip it at a substantial profit.  Weinstein and his conspirators further told the Facebook victims that Weinstein had already placed $2.5 million in the trust account of a Miami law firm for the transaction; that if the Facebook victims contributed another $2.5 million toward the transaction, those funds would remain in escrow at the Miami law firm until the deal closed; and that the Facebook victims would be repaid within 60 days. In reliance on these representations, the Facebook victims wired approximately $2.83 million to the Miami law firm in order to complete the Belle Glades Gardens transaction. Weinstein and his conspirators, however, did not use the money to purchase Belle Glades Gardens. Instead, they allegedly redirected the money from the law firm to accounts that they controlled, returned $1.8 million to the Facebook victims as a purported return on their Facebook investment, and used the remaining money for their own purposes.

In July 2012, Weinstein allegedly approached another group of investor victims (referred to in the indictment as the “Florida condominium victims”) and told them that he had the opportunity to purchase the notes on seven condominiums in Florida at a discounted price of $3 million. Weinstein and his conspirators falsely represented that they had already paid $1.5 million toward the deal, and that they needed only $1.5 million to complete the transaction.  They claimed that the properties had an annual rental income of approximately $780,000, and provided to the Florida condominium victims fraudulent documentation purporting to verify this fact. The Florida condominium victims transferred approximately $1.5 million to Weinstein and his conspirators between August 2012 and December 2012.  Weinstein did not use this money to purchase the notes on the Florida condominiums – many of which he himself had previously owned and lost to foreclosure.  Instead, Weinstein and his conspirators converted the money to their own use and benefit.

Throughout the scheme, Weinstein was already under indictment and on pretrial release, and was prohibited from engaging in any monetary transaction for more than $1,000 without the approval of court-appointed special counsel. Weinstein pleaded guilty on Jan. 3, 2013, before U.S. District Judge Joel A. Pisano in Trenton, N.J., to two counts of that indictment, admitting he ran a Ponzi-style real estate investment fraud scheme that caused $200 million in losses and then laundered the proceeds of the scheme. Judge Pisano sentenced Weinstein on Feb. 25, 2014, to 264 months in prison and ordered him to pay more than $200 million in restitution and forfeiture to the victims of his scheme.

The conspiracy count with which Weinstein is charged carries a maximum potential penalty of 20 years in prison; the wire fraud counts carry a maximum potential penalty of 30 years in prison (20 years on the wire fraud plus 10 years for commission while on pretrial release); and the transacting in criminal proceeds counts carry a maximum potential penalty of 10 years in prison. All the counts are also punishable by a $250,000 fine.

Charges against Muschel and Schleider, who were charged in the criminal complaint filed against Weinstein in May 2013, remain pending.

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 indictment. He also credited special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for role in the case.

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. Attorneys Zach Intrater of the Economic Crimes Unit and Evan S. Weitz of the Asset Forfeiture and Money Laundering Unit.

The charges and allegations against the defendants are merely accusations, and they are considered innocent unless and until proven guilty.

Today’s indictment 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.

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Defense counsel:  Eric Creizman Esq., New York

Weinstein, Eliyahu Indictment II

Pair Netted More Than $1.4 Million in Illicit Profits over Five Years

NEWARK, N.J. - Two former pharmaceutical and medical technology firm executives were sentenced today for their involvement in an extensive insider trading network that repeatedly exploited non-public material information for financial gain, U.S. Attorney Paul J. Fishman announced.

Mark Cupo, 53, of Morris Plains, N.J. was sentenced to 16 months in prison and Mark Foldy, 44, also of Morris Plains, N.J. was sentenced to two years of probation, including six months of home confinement with electronic monitoring. Cupo previously pleaded guilty before U.S. District Judge Katharine S. Hayden to a seven-count information charging him with two counts of conspiracy to commit securities fraud and five counts of securities fraud. Foldy previously pleaded guilty before Judge Hayden to a four-count information charging him with one count of conspiracy to commit securities fraud and three counts of securities fraud. Judge Hayden imposed both sentences today in Newark federal court.

According to documents filed in this case and statements made in court: From 2007 to 2012, Cupo, who was an executive at Sanofi-Aventis, a global pharmaceutical company based in New Jersey, repeatedly obtained non-public material information from his friend and former employee, John Lazorchak, 43, of Long Valley, N.J., who was director of financial reporting at Celgene Corp., another global pharmaceutical company based in New Jersey. The inside information included non-public merger and acquisition plans, quarterly earnings results, and a regulatory application decision. Cupo would pass the information to his friends, Lawrence Grum, 50, of Livingston, N.J., and Michael Castelli, 50, of Morris Plains, N.J., who would then execute numerous profitable trades based on that information and share the profits with Cupo and Lazorchak.

During the course of the multi-year insider trading operation, Cupo divulged inside information to Grum and Castelli regarding then-confidential plans by his own employer, Sanofi-Aventis, to acquire Chattem Inc. Grum and Castelli traded on the Chattem-related inside information prior to its public announcement, reaping substantial profits.

Foldy, a friend and high school classmate of Lazorchak, was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey. Through the course of his employment at Stryker, Foldy learned of Stryker’s then-confidential plans to acquire Orthovita Inc. Foldy leaked news of the planned acquisition to Lazorchak prior to public announcement, and Lazorchak, in turn, passed the inside information to Cupo. Cupo informed Grum and Castelli of the impending deal so that they could trade ahead of the public announcement of the Orthovita acquisition for substantial profits.

Foldy also received inside information from Lazorchak regarding Celgene’s planned acquisition of Pharmion Corp. and profitably traded on the Pharmion-related inside information. Foldy passed inside information on to a family member and friend.

In addition to the prison terms, Judge Hayden sentenced Cupo to two years of supervised release.
Cupo and Foldy are the third and fourth defendants charged with participating in this insider trading network to be sentenced. On April 9, 2014, Grum was sentenced to one year and one day in prison and Castelli was sentenced to nine months in prison. Lazorchak is scheduled to be sentenced by Judge Hayden on April 22, 2014, and another conspirator and high school friend of Lazorchak, Michael Pendolino, is scheduled to be sentenced by Judge Hayden on May 5, 2014.

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 sentences.  He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel M. Hawke.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

Today’s sentencing 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.

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Defense counsel: Cupo:  Joseph J. Bell Esq. and Joseph J. Bell IV Esq., Rockaway, N.J.
Mark Foldy: Jonathan Marks Esq., New York
John Lazorchak: Lawrence S. Lustberg Esq., Newark
Lawrence Grum: Scott A. Resnik Esq., New York
Michael Castelli: Daniel Zinman Esq. and Daniel Stein Esq., New York
Michael Pendolino: James S. Friedman Esq., Newark

NEWARK – A Middlesex County, N.J., man was sentenced today to 18 months in prison for his role in filing fraudulent income tax returns and illegally receiving approximately $500,000 in refunds, U.S. Attorney Paul J. Fishman announced.

Badatunde Olugbake, 55, of Perth Amboy, N.J., previously pleaded guilty before U.S. District Judge Jose L. Linares to a three-count information charging him mail fraud, filing false claims against the United States, and receiving stolen government funds. Judge Linares imposed the sentence today in Newark federal court. 

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

From February 2008 through December 2010, Olugbake was involved in a scheme to file false and fraudulent tax returns to obtain tax refund checks. Olugbake deposited more than $400,000 in tax refunds as part of that scheme into bank accounts he controlled.

Through the unauthorized use of names and Social Security numbers of unsuspecting victims, along with false addresses, statements concerning income and dependents, and claims for refunds, Olugbake manipulated tax returns so that the purported claimants qualified for the Earned Income Credit. Olugbake then mailed the fraudulent returns to the IRS. The IRS processed the false returns as if they were legitimate and issued refund checks that were mailed to the fraudulent addresses associated with the returns, where the checks were retrieved by Olugbake and deposited into bank accounts under his control.

In addition to the prison term, Judge Linares sentenced Olugbake to three years of supervised release and ordered him to pay $500,422 in restitution.

U.S. Attorney Fishman credited special agents of 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 investigation leading to today’s sentencing. 

The government is represented by Assistant U.S. Attorney Andrew J. Bruck of the U.S. Attorney’s Criminal Division and Assistant U.S. Attorney Jacques S. Pierre of the U.S. Attorney’s Special Prosecutions Division in Newark.

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Defense counsel: Vincent J. Nuzzi Esq., Dover, N.J.

CAMDEN, N.J. – The principal of a Pennsylvania construction company today admitted his role in an employee kickback scheme that occurred during a reconstruction project at the Ft. Dix military base in Burlington County, N.J., U.S. Attorney Paul J. Fishman announced today.

Leonard Santos, 67, of Yardley, Pa., owner of Sands Mechanical Inc. of Bristol, Pa., pleaded guilty before U.S. District Judge Joseph H. Rodriguez in Camden federal court to Count One of an indictment charging him with conspiracy to obtain kickbacks from public works employees and Count Three, charging him with causing persons to travel in interstate commerce to commit a crime of violence.

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

Between November 2009 and September 2010, Santos operated Sands Mechanical Inc. as a subcontractor on the restoration and rehabilitation of the Marine Corps Reserve Training Center at Joint Base-McGuire-Dix-Lakehurst in Burlington County, N.J. Sands provided HVAC and plumbing services. The general contractor was a company headquartered in Marriotsville, Md.  During the project Santos demanded that certain employees kickback a percentage of their weekly paychecks or face termination.

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

The general contractor’s site manager was routinely critical of the work performance of Sands’ employees, which, at times, necessitated that work be done over. The site manager was targeted by Santos, Cottone and others by having his truck torched in front of his residence at 4 a.m. on May 17, 2010. This tactic failed to warn off the site manager. On June 09, 2010, at 5 AM, while riding his bike, the site manager was intentionally run down by a car driven by Cottone’s nephew and two friends. The victim sustained multiple serious injuries.

The count of conspiracy to demand kickbacks from employees on a federally subsidized project carries a maximum potential penalty of five years in prison and a $250,000 fine. The count of causing others to travel in interstate commerce to commit a crime of violence carries a maximum potential penalty of 20 years in prison. Sentencing is scheduled for July 28, 2014.

Two Sands’ supervisors have already pleaded guilty to these charges: Richard Cottone, 39, of Windsor, Pa., (Santos’ son-in-law) pleaded guilty Dec. 11, 2012, and Michael Featherston, 44, of Cumberland County, N.J., pleaded guilty Jan. 10, 2012. Both are awaiting sentencing. A third Sands supervisor, Alex Rabinovich, 58, of Richboro, Pa., pleaded guilty on Sept. 18, 2013, to Count Four, conspiracy to bribe a representative of a prime contractor of federally subsidized construction projects and is awaiting sentencing.

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

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

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

Santos, Leonard and Rabinovich, Alex Indictment

CAMDEN, N.J. – A Burlington County, N.J., man was sentenced today to 30 years in prison for his role in producing images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

David Clark, 49, of Southampton, N.J., previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez in to an information charging him with three counts of producing child pornography. Judge Rodriguez imposed the sentence today in Camden federal court.

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

From 2004 through March 9, 2011, Clark employed, used, persuaded, induced, enticed or coerced three separate minor victims to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct.

In addition to the prison term, Judge Rodriguez sentenced Clark to a lifetime term of supervised release.

U.S. Attorney Fishman credited special agents of the FBI=s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford in Newark; investigators with the Burlington County Prosecutor=s Office, under the direction of Prosecutor Robert D. Bernardi; and detectives with the N.J. State Police, under the direction of Col. Rick Fuentes, and the N.J. Regional Computer Forensic Laboratory, with the investigation leading to today=s sentencing.

The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the Criminal Division in Camden.

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Defense counsel: Lori M. Koch Esq., Assistant Federal Public Defender, Camden

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

Shaamel Spencer, a/k/a “Buck,” 30, 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 100 grams or more of heroin, and one count of being a previously convicted felon in possession of a firearm.  

According to documents filed in this case and statements made in court: During the period of the conspiracy Spencer acted as an “enforcer” on behalf of Mykal Derry, 33, of Atlantic City, helping Dirty Block to control the heroin trafficking trade in and around the public housing apartment complexes of Stanley Holmes, Carver Hall, Schoolhouse, Adams Court and Cedar Court in Atlantic City. Spencer assisted in the distribution of heroin to Dirty Block customers.

Spencer was arrested on October 30, 2012, and found to be in possession of a firearm at the time of the arrest. On February 12, 2013, Spencer was charged federally with being a previously convicted felon in possession of a firearm and ammunition. A search warrant executed at Spencer’s residence at the time of his arrest revealed approximately $4,500 in suspected drug proceeds, as well as a 9mm semi-automatic handgun and approximately 44 rounds of 9mm ammunition.

Spencer and other members of the Dirty Block gang – a number of them previously convicted felons – travelled to a shooting range in Lakewood, N.J., where they were photographed firing handguns. 

As part of his guilty plea, Spencer admitted to distributing heroin. He also admitted to being a previously convicted felon who possessed firearms and ammunition, and that specifically, he took a handgun to an Atlantic City casino where he believed Derry was involved in a violent fight with his rivals. Spencer also agreed to forfeit the proceeds of his drug trafficking as well as his firearms and ammunition.

The drug conspiracy charge carries a minimum penalty of five years in prison, a maximum potential penalty of 40 years in prison, and maximum $5 million fine. The felon-in-possession charge carries a maximum potential penalty of 10 years in prison and a maximum $250,000 fine. Sentencing is scheduled for July 22, 2014.

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 Acting Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Police Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang Task Force, with the investigation.

The charges and allegations in the indictment charging Derry are merely accusations and the defendant is presumed innocent unless and until proven guilty.

The government is represented by Assistant U.S. Attorneys Patrick C. Askin and Justin C. Danilewitz.

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

Spencer, Shaamel Information

NEWARK, N.J. - An Essex County, N.J., man with a felony criminal record has been convicted by a federal jury for carrying a loaded semi-automatic pistol, U.S. Attorney Paul J. Fishman announced today.

Victor Lopez, 25, of Newark, was convicted of one count of being a felon in possession of a firearm following a three-day trial before U.S. District Judge Anne E. Thompson in Newark federal court. The jury deliberated for four hours before returning the guilty verdict.

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

Officers of the Passaic Police Department responded to a 911 call on Sept. 13, 2012, about a possible burglary in progress at an apartment building in Passaic, N.J., where they encountered Lopez leaving the building

Officers questioned the Lopez, who appeared nervous, and found a gun in his back pocket. The .380 caliber semi-automatic handgun was loaded with seven bullets, including one in the chamber. Four of the bullets were hollow-point rounds.

The charge of being a felon in possession carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for June 23, 2014.

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of,       and officers of the City of Passaic Police Department, under the direction of Deputy Chief Rosario J. Capuana, with the investigation.

The government is represented by Assistant U.S. Attorneys Sara F. Merin and Jonathan W. Romankow of the U.S. Attorney=s Office Criminal Division in Newark.

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Defense counsel: Vincent Sanzone Jr. Esq., Elizabeth, N.J.

Allegedly Made Millions of Dollars in Cash Deposits; Transferred Ownership of Home to Family Member; and Failed to File Tax Returns

NEWARK – A Bergen County, N.J., doctor who owns three immediate care facilities in Hudson County, N.J., was arrested today on multiple tax violations, including allegedly making cash deposits of more than $5.8 million into bank accounts he controlled, U.S. Attorney Paul J. Fishman announced.

Medhat El Amir, 59, of Saddle River, N.J., was indicted April 10, 2014, by a federal grand jury on one count of corruptly endeavoring to impede the due administration of the internal revenue code, four counts of tax evasion and three counts of failure to file tax returns. He was arrested at his home this morning by agents of IRS-Criminal Investigation and the U.S. Department of Health and Human Services, Office of Inspector General. He is scheduled to make his initial court appearance this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.

According to the Indictment: El Amir was a primary care doctor and 60 percent owner of Immediate Care P.C., (Immediate), which provided urgent care health services for its patients at an office in North Bergen, N.J., and two offices in Jersey City.

From Feb. 11, 2005, through Dec. 31, 2010, El Amir allegedly attempted to impede the internal revenue code in a number of ways. He fraudulently transferred his residence in Saddle River to his sister, identified only as “A.E.A.,” for $2.5 million to keep the property out of the reach of the IRS while continuing to live there. He also cashed checks made out to Immediate at a check cashing facility and deposited that unreported income into a number of bank accounts he controlled and used the money for personal expenses. During a four-year period, El Amir received checks totaling $7,261,084 from insurance companies for medical treatments provided by Immediate and caused $5,836,298 in cash to be deposited into 15 bank accounts he maintained and/or controlled.

El Amir also allegedly filed a false 2008 personal income tax return, claiming interest deductions to which he was not entitled, and sent fraudulent correspondence to the IRS that under-reported the amount of income he and his wife received from Immediate in calendar year 2008 and the amount of income deductions to which he was entitled.            

Despite earning a significant income through Immediate, El Amir did not file a personal income tax return, Form 1040, for calendar years 2007, 2009 and 2010. While El Amir did file a personal income Form 1040 for calendar year 2008, this return substantially under-reported the income El Amir received from Immediate 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 $5,000 fine. The counts of tax evasion each carry a maximum potential penalty of five years in prison and a $250,000 fine and the counts of failure to file a tax return each carry a maximum potential penalty of one year in prison and a $25,000 fine.

U.S. Attorney Fishman 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 Tom O’Donnell, with the investigation leading to today’s indictment.

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 $535 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.

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El Amir, Medhat Indictment

TRENTON, N.J. – A West Orange, N.J., woman who defrauded an elderly victim of nearly $100,000 by taking the victim’s Social Security payments and secretly applying for a reverse mortgage on the victim’s home was sentenced today to 30 months in prison, U.S. Attorney Paul J. Fishman announced.

Shawn L. Craig, 47, previously pleaded guilty before U.S District Judge Michael A. Shipp to an information charging her with one count of mail fraud and one count of filing false personal federal income tax return for 2011 by not disclosing income, including money fraudulently obtained from her victim. Judge Shipp imposed the sentence today in Trenton federal court.

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

In November 2010 Craig entered into a general power of attorney with the victim, an elderly woman, to serve as her attorney-in-fact. Craig was trusted to act in the victim’s best interest and to arrange for the payment of the victim’s living expenses. 

After gaining access to the victim’s bank accounts, Craig diverted a portion of the victim’s funds for her own benefit and the benefit of her family, including paying her automobile insurance; purchasing a bar and bar stools; making a tuition payment; and paying for entertainment at the Wachovia Center in Philadelphia. At the time Craig made those purchases, the funds in the victim’s accounts consisted primarily of the victim’s Social Security benefits. 

In December 2010, Craig submitted an application in the victim’s name to a commercial lender for a reverse mortgage on the victim’s residence in East Orange. When the victim refused to sign a specific power of attorney permitting the closing of the reverse mortgage to go forward, Craig forged the victim’s signature on the document and presented it to the title agent at the title agent’s office in Morristown, N.J.

Craig used the money from the reverse mortgage to purchase items at retail establishments including Gucci, Coach, Nike, Apple, Footlocker and various other shoe stores; pay for meals and entertainment at restaurants, liquor stores and other establishments, including the Taj Mahal in Atlantic City, N.J., the Staples Center in Los Angeles and Amazing LA Tours in Santa Monica, Calif.; fund travel to, and stays at, hotels in New Jersey, California and Florida; and pay personal bills, including automobile insurance, gas and electric, cell phone and cable bills.

In June 2011, Craig was notified that the general power of attorney had been revoked, so she transferred the victim’s funds to a new bank account. In all, Craig misused approximately $99,000 of the victim’s funds.

Craig also admitted that she caused a tax preparer to prepare and electronically file with the IRS a false and fraudulent personal income tax return for tax year 2011 by not disclosing as income the funds that she had fraudulently obtained from the victim. 

In addition to the prison term, Judge Shipp sentenced Craig to three years of supervised release, fined her $10,000 and ordered her to pay restitution of $75,663.

U.S. Attorney Fishman credited special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Region, under the direction of special Agent in Charge Christina Scaringi; the FBI, under the direction of Special Agent in Charge Aaron T. Ford; IRS – Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and Social Security Administration, Office of Inspector General, under the direction of Special Agent in Charge Edward J. Ryan, with the investigation leading to today’s sentence.

The government is represented by Assistant U.S. Attorneys Maureen Nakly and Jacques S. Pierre of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

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Defense counsel: Thomas R. Ashley Esq., Newark

NEWARK, N.J. – Two leaders of a Bloods street gang set known as the “Red Breed Guerillas” were sentenced today to prison terms for drug trafficking and illegal possession of weapons, U.S. Attorney Paul J. Fishman announced.

Kaseem Upshaw, a/k/a “Uzi Kaz”, 34, and Anthony Pearson, a/k/a “Iz”, 32, both of Newark, were sentenced to 130 and 128 months, respectively, in prison. Both pleaded guilty in November 2013 before U.S. District Judge Esther Salas to conspiracy to distribute heroin and being convicted felons in possession of eight firearms. Judge Salas imposed the sentence today in Newark federal court.

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

On Sept. 1, 2011, law enforcement officials executed a search warrant on an apartment on Stratford Place in Newark. They recovered 2,440 envelopes of heroin and eight guns, including three semi-automatic rifles, four handguns, and one shotgun, as well as 400 rounds of ammunition. Pearson and Upshaw were charged in a superseding indictment with being leaders of the Bloods set known as the “Red Breed Guerillas,” which controlled the drug trade in that area of Newark, and with being responsible for maintaining that apartment as part of their heroin distribution efforts.

During their guilty pleas, both Pearson and Upshaw admitted that from March 1, 2011, through Sept. 1, 2011, they used the apartment on Stratford Place in Newark to store heroin that was eventually distributed on the street.  They both admitted they were in possession of the eight firearms after having previously convicted of felonies in New Jersey Superior Court.

In addition to the prison terms, Judge Salas sentenced Upshaw and Pearson each to five years of supervised release.

U.S. Attorney Fishman credited Drug Enforcement Administration, under the direction of Special Agent in Charge Carl Kotowski; and Newark Police Department, under the direction of Police Director Sheilah A. Coley and Police Chief Ivonne Roman, for the investigation leading to today’s sentencings.

The Government was represented by Assistant U.S. Attorneys James Donnelly and Robert Frazer of the Organized Crime/Gangs Unit in Newark.

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Defense counsel: Pearson: Michael Pedicini Esq., Chatham, N.J.

Upshaw: James Patton Esq., Livingston, N.J.

NEWARK, N.J. – The two primary traders in an extensive insider trading network were sentenced to prison today for repeatedly using information divulged by insiders at pharmaceutical/medical technology firms operating in New Jersey, U.S. Attorney Paul J. Fishman announced.

Lawrence Grum, 50, of Livingston, N.J., was sentenced to one year and one day in prison and Michael Castelli, 50, of Morris Plains, N.J., was sentenced to nine months in prison. Grum previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with two counts of conspiracy to commit securities fraud and four counts of securities fraud. Castelli previously pleaded guilty before Judge Hayden to an information charging him with two counts of conspiracy to commit securities fraud and five counts of securities fraud. Judge Hayden imposed both sentences today in Newark federal court.

According to documents filed in this case and statements made in court: From 2007 to 2012 Grum and Castelli executed numerous, profitable trades based on inside information fed to them by their friend, Mark Cupo, 53, of Morris Plains, who was an executive at Sanofi-Aventis, a global pharmaceutical company with United States operations based in New Jersey. Cupo, in turn, obtained much of the inside information from his friend and former employee, John Lazorchak, 43, of Long Valley, N.J., who was director of financial reporting at Celgene Corp., another global pharmaceutical company based in New Jersey. Lazorchak also obtained certain inside information from Mark Foldy, 44, of Morris Plains, a friend and former high school classmate of Lazorchak, who was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey.

During the course of the multi-year insider trading operation, Grum and Castelli regularly received from Lazorchak, via Cupo, material, non-public information about Celgene’s anticipated corporate acquisitions, numerous quarterly earnings results, and regulatory news, with the understanding that Grum and Castelli would trade based on the inside information and share their profits with Lazorchak and Cupo. Grum and Castelli also received inside information directly from Cupo regarding a corporate acquisition planned by Cupo’s employer, Sanofi, as well as inside information Cupo had obtained from Lazorchak regarding a Stryker acquisition. Lazorchak, in turn, had obtained the Stryker inside information from his friend, Foldy.

Grum and Castelli made efforts to conceal their involvement in insider trading by, for example, compiling binders of market research to try to provide an independent basis for their knowledge of confidential, material nonpublic information.

The material, non-public information available to Grum and Castelli enabled them to reap substantial profits by engaging in lucrative securities trading ahead of the public announcement of several corporate acquisitions, numerous quarterly earnings results, and regulatory news. In addition, they shared a portion of their profits with Lazorchak and Cupo for their respective roles in providing Grum and Castelli inside information.

In addition to the prison terms, Judge Hayden sentenced Grum and Castelli to two years each of supervised release.

Grum and Castelli are the last of the six defendants charged with participating in this insider trading network to plead guilty. The other four defendants:  Lazorchak, Cupo, Foldy, and Michael Pendolino, 44, of Nashua, N.H., entered their guilty pleas before Judge Hayden on Oct. 7, 2013, and are awaiting sentencing.

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 pleas.  He also thanked the U.S. Securities and Exchange Commission=s Market Abuse Unit, under the direction of Daniel M. Hawke.

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

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov. 

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Defense counsel: Lawrence Grum:  Scott A. Resnik Esq., New York
Michael Castelli:  Daniel Zinman Esq. and Daniel Stein Esq., New York
John Lazorchak:  Lawrence S. Lustberg Esq., Newark
Mark Cupo:  Joseph J. Bell Jr. Esq. and Joseph J. Bell, IV Esq., Rockaway, N.J.
Mark Foldy:  Jonathan Marks Esq., New York, Michael Pendolino:  James S. Friedman Esq., Newark

NEWARK, N.J. – A chiropractor with a practice in Toms River, N.J., admitted today to accepting bribes to refer a number of his patients to a New Jersey-licensed pain management physician, U.S. Attorney Paul J. Fishman announced.

Norman Eastburn, 48, of Jackson, N.J., pleaded guilty to an information charging him with one count of violating the Anti-Kickback statute. He entered his guilty plea before U.S. District Judge Stanley R. Chesler in Newark federal court.

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

Eastburn was paid a cash fee per patient he referred to the pain management physician. As part of the scheme, the pair negotiated specific kickback amounts that would be paid based on which payor would be billed – Medicare or a private healthcare insurer – and what type of pain treatment would be rendered.

Eastburn indicated to the pain physician that a medical doctor’s involvement in pain procedures would increase Eastburn’s likelihood of being reimbursed by insurers. As an example, Eastburn recounted a prior situation in which he misled a patient by telling her that she required an injection that he did not then believe, in fact, was medically necessary, then then paid a doctor $500 in cash to administer it.

The violation of the Anti-Kickback statute carries a maximum potential penalty of five years in prison and a $250,000 fine. In addition, Eastburn has agreed to forfeit to the United States the money he was paid in bribes. Sentencing is scheduled for July 8, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, with the investigation.

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 $535 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 Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

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Defense counsel: Peter Carter Esq., Assistant Federal Public Defender, Newark

Eastburn, Norman Information

26th Defendant to Plead Guilty in Connection with Scheme

NEWARK, N.J. – A physician with a practice in Madison, N.J. admitted today to accepting bribes of $2,000 per month in exchange for test referrals as part of a long-running scheme operated by Biodiagnostic Laboratory Services LLC (BLS) of Parsippany, N.J., its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Wayne Lajewski, 51, pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes.

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

Lajewski admitted he accepted bribes of $2,000 cash per month over two years in return for referring patient blood specimens to BLS, for which BLS received more than $850,000.

The bribery count to which Lajewski pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for July 8, 2014. As part of his guilty plea, Lajewski agreed to forfeit $48,000, representing the bribes he received from BLS.

Including Lajewski, 26 people – including 15 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.

The investigation has recovered more than $7 million to date through forfeiture.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; 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 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 $535 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: Robert C. Scrivo Esq., Morristown, N.J.

Lajewski, Wayne Information

TRENTON, N.J. – A former partner of a Freehold, N.J.-based office equipment leasing company today admitted stealing more than $600,000 in a fraudulent loan scheme, U.S. Attorney Paul J. Fishman announced.

Jason Lee Lum, 35, of Yardley, Pa., pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with wire fraud for receiving approximately $682,000 in fraudulently obtained loan proceeds.

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

Lee Lum was a partner in a company called Superior Data Corp., which was in the business of providing office equipment leasing services. As a result of the high cost of leasing office equipment, the company would obtain loans through a financing company for its clients to lease office equipment. After a client agreed to lease office equipment, a company employee would submit the lease agreement paperwork to the financing company in order to obtain a loan for the client. If the financing company approved the loan, the financing company would send the loan proceeds directly to the company’s bank account. The client would then receive the leased office equipment and would directly repay the loan to the financing company.

As a partner at the company, Lee Lum was responsible for the company’s finances and for submitting loan documentation on behalf of clients. From October 2011 to May 2012, Lee Lum forged signatures of existing company clients on loan documents and then submitted the documents to the financing company. The company clients had neither approved nor consented to the loan documents being submitted, nor did the clients obtain any office equipment in connection with the fraudulent loan applications. When the financing company approved the fraudulent loan applications, Lee Lum directed the proceeds to be sent to the company’s bank account, which he controlled. Lee Lum used the fraudulently obtained loan proceeds to pay personal expenses, company payroll (including his own salary), and to increase the company’s revenue for accounting purposes. Lee Lum sought to conceal his fraud by making payments on the fraudulently obtained loans. When Lee Lum began to fall behind on those payments, the financing company that issued the loans sought payment directly from the company’s clients, whose names were on the fraudulent loans.

The wire fraud count to which Lee Lum pleaded guilty carries a maximum penalty of 20 years in prison and a $250,000 fine. As part of the plea, Lee Lum agreed to pay restitution in the amount of $682,862. Sentencing is scheduled for Sept. 19, 2014. 

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 Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton.

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Defense counsel: Frederick W. Klepp Esq., Cherry Hill, N.J. 

Lee Lum, Jason Information

NEWARK, N.J. - A Nigerian national who formerly resided in Livingston, N.J., was arraigned today on a 31-count superseding indictment charging him with participating in an $3 million scheme to use stolen identities to generate fraudulent tax refunds, U.S. Attorney Paul J. Fishman announced.

Kole Akinola, 40, allegedly engaged in a stolen identity refund fraud, or “SIRF,” scheme that resulted in more than $3 million in losses to the U.S. Treasury and the theft of the personal identification information of hundreds of individuals. Akinola was indicted April 1, 2014, and was arraigned on the charges today before U.S. District Judge Jose L. Linares in Newark federal court. The superseding indictment charges Akinola with one count of conspiring to steal government funds, 10 counts of misusing the personal identification information of others, 10 counts of illegally using social security numbers and 10 counts of aggravated identity theft.

Akinola originally was arrested on a complaint in April 2011 and indicted in May 2011 on one count of conspiring to steal government funds in relation to an approximately four-month scheme to file fraudulent income tax returns to illegally obtain refunds.  Akinola, who is subject to a final order of removal to Nigeria, has been detained since the time of his arrest.  The new charges allege a conspiracy lasting approximately three years, including the time of his incarceration. 
  
According to documents filed in this case and statements made in court: In April 2011, Akinola was arrested for driving under the influence in Glen Ridge, N.J.  At the time of arrest, Akinola was found to be in possession of debit cards and Turbo Tax receipts in the names of third parties; two composition books and loose papers containing the personal identifiers of numerous individuals, including names, social security numbers and dates of birth; a July 2007 inmate population report from Union County Correctional Facility, which included the names, social security numbers, and dates of birth of over 700 inmates; W-2 forms in the names of third parties, which included employer identification numbers, or “EINs”; and  several cellular telephones and handheld electronic devices.

The government alleges that the personal identification information, EINs, and electronic devices found in Akinola’s possession at the time of his arrest were used in connection with a SIRF conspiracy to file numerous fraudulent tax returns seeking tax refunds.
 
Akinola and the other members of the conspiracy obtained personal identifiers – such as dates of birth and Social Security numbers – belonging to numerous U.S. citizens, including from inmate population reports from prison facilities. The conspirators used those identifiers to create fake 1040 forms, which falsely reported wages and withheld taxes to create the appearance that the “taxpayers” were entitled to tax refunds. The returns were filed electronically with the IRS and generated refunds.

Members of the conspiracy then directed the refunds onto pre-paid debit cards, which were mailed to addresses in New Jersey and elsewhere, where they could be retrieved by the conspirators. They then used the pre-paid debit cards to make ATM withdrawals and purchases in New Jersey for their personal use and benefit.

As recently as July 2013, while incarcerated at Hudson County Correctional Facility, Akinola was found to be illegally in possession of a cellular telephone and three prison inmate population reports, from three separate dates, that contained the names and personal identification information of hundreds of inmates.          
The conspiracy count carries a maximum potential penalty of 10 years in prison; each count of misuse of personal identification information carries a maximum potential penalty of 15 years in prison; each count of illegal use of a Social Security number carries a maximum potential penalty of five years in prison; and each aggravated identity theft count carries a mandatory penalty of two years in prison, which would be consecutive to any term imposed for a conviction of illegal use of a Social Security number. Each count also carries a maximum $250,000 fine.

U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Jonathan D. Larsen; and postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Marie Kelokates, for the investigation.

The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky and Andrew S. Pak of the U.S. Attorney’s Office Criminal Division in Newark.

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

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Defense counsel: Assistant Federal Public Defender K. Anthony Thomas Esq., Newark

Akinola, Kole SIndictment

NEWARK, N.J. - An internal affairs officer of the Miami-Dade Police Department was arrested this morning in Miami Gardens, Fla., and charged with allegedly aiding a narcotics trafficking organization – distributing cocaine from the Dominican Republic in New Jersey and elsewhere – by orchestrating a murder-for-hire plot; providing firearms and sensitive law enforcement information; and facilitating the transport of drug proceeds, New Jersey U.S. Attorney Paul J. Fishman announced.

Ralph Mata, 45, a/k/a “the Milk Man,” of Broward County, Fla. – a lieutenant with the Miami-Dade Police Department, Internal Affairs – is charged by federal criminal complaint with one count each of: aiding and abetting a conspiracy to distribute cocaine; conspiring to distribute cocaine; and engaging in monetary transactions in property derived from specified unlawful activity – specifically, drug proceeds.

Mata is scheduled to appear tomorrow, April 9, 2014, before U.S. Magistrate Judge Alicia M. Otazo-Reyes in federal court in the Southern District of Florida.
 
According to the complaint unsealed today: After rival drug dealers threatened to kill members of the drug trafficking organization, or “DTO,” with which Mata conspired, Mata and members of the DTO discussed a murder plot. Mata stated that his contacts – assassins – would wear uniforms and badges to make it appear as though the two targets of the plot were being pulled over by law enforcement before shooting them. Mata arranged to pay two assassins $150,000 per target. Ultimately, the DTO decided not to move forward with the murder plot, but Mata still received a payment for setting up the meetings.

Mata purchased several firearms to provide protection and security to the DTO members located in the Dominican Republic, which he transported on two separate trips from Miami to the Dominican Republic between Oct.5, 2012, and Jan. 17, 2013. A number of these firearms have been recovered by law enforcement.

Mata also helped to transport narcotics proceeds for the DTO in exchange for thousands of dollars in cash and a Rolex watch valued at approximately $10,000.

Mata also used sources of information available to him as a law enforcement officer to find out information about the seizure of $419,000 in narcotics proceeds from a Bergen County, N.J., residence, which members of the DTO suspected had been stolen by another member, but were in fact seized by law enforcement.

The narcotics charges each carry a statutory mandatory minimum penalty of 10 years in prison and a maximum potential penalty of life in prison and a $10 million fine. The transaction involving drug proceeds charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine.
 
U.S. Attorney Fishman credited special agents of the FBI’s Garret Mountain Resident Office, under the direction of Special Agent in Charge Aaron T. Ford in Newark; the DEA’s Paterson Post of Duty under the direction of Special Agent in Charge Carl J. Kotowski; IRS – Criminal Investigation, Newark Field Office, under the Acting Special Agent in Charge Jonathan D. Larsen; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, New York, under the direction of  James T. Hayes Jr. He also thanked the Miami FBI, Miami-Dade Police Department and Miami-Area Corruption Task Force for their assistance with the arrest. The investigation is ongoing.

The government is represented by Assistant U.S. Attorneys Mary Toscano of the U.S. Attorney’s Office Special Prosecutions Division, José Almonte of the Criminal Division, and Barbara Ward and Marion Percell, Chief, of the office’s Asset Forfeiture Unit.
 
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: TBD

Mata, Ralph Complaint

TRENTON, N.J. – A Trenton, N.J., man with a previous conviction for drug distribution was sentenced today to 96 months in prison for possessing three firearms, including a loaded semi-automatic rifle and a loaded revolver, U.S. Attorney Paul J. Fishman announced.

Isaiah Harris, 26, previously pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with one count of being a convicted felon in possession of firearms and ammunition. Judge Shipp imposed the sentence today in Trenton federal court.

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

At approximately 6:00 a.m. on Nov. 15, 2012, law enforcement officers entered a residence on Stuyvesant Avenue in Trenton to execute an unrelated warrant for Harris’ arrest and encountered Harris in a bedroom on the second floor. They recovered a loaded Taurus .38-caliber revolver from the bed Harris had been occupying and later discovered in the bedroom a loaded Norinco SKS, 7.62 semi-automatic rifle and a partially disassembled second Norinco SKS, 7.62 semi-automatic rifle. Harris admitted at his plea hearing that he possessed these weapons.

In addition to the prison term, Judge Shipp sentenced Harris to three years of supervised release, ordered him to forfeit the firearms and ammunition and fined him $1,000.

U.S. Attorney Fishman credited special agents and task force officers of the ATF’s Trenton Field Office, under the direction of Acting Special Agent in Charge George Belsky in Newark, N.J., and law enforcement officers from the Trenton Police Department, under the direction of Police Director Ralph Rivera Jr.; the Mercer County Sheriff’s Office, under the direction of Sheriff John Kemler; and the Mercer County Prosecutor’s Office, under the direction of Prosecutor Joseph L. Bocchini Jr., for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton.

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Defense counsel: Assistant Federal Public Defender Lisa Van Hoeck Esq., Trenton

CAMDEN, N.J. - The owners of popular Ocean City, N.J., restaurant chain Manco & Manco Pizza were arrested this morning at their Somers Point, N.J., home by IRS-Criminal Investigation special agents on an indictment charging the couple with multiple counts of tax evasion and other offenses, U.S. Attorney Paul J. Fishman announced.

Charles Bangle, 54, and his wife Mary Bangle, 53, face a 30-count indictment charging the couple with one count of conspiracy to evade income taxes, five counts of income tax evasion for 2007 through 2011, and one count of making false statements to the IRS. Charles Bangle is also charged with 23 counts of structuring financial transactions to avoid reporting requirements.

The Bangles are scheduled to appear on the charges this afternoon before U.S. Magistrate Judge Ann Marie Donioin Camden federal court.

According to the indictment unsealed today: Manco & Manco Pizza – formerly Mack & Manco – is an iconic restaurant located in the heart of the Ocean City’s Boardwalk and maintains three stores on the Boardwalk and one store in Somers Point. Charles and Mary Bangle were employees of Mack & Manco Pizza until they purchased a controlling interest in 2011. Charles Bangle handled the day-to-day operations of the business and Mary Bangle was responsible for handling cash and payroll.

Between 2007 and 2011, Charles and Mary Bangle skimmed large sums of cash from the business. Charles Bangle deposited significant amounts of that cash into their personal bank account at TD Bank in amounts less than $10,000, the amount which triggers a Currency Transaction Report from financial institutions to the U.S. Department of Treasury. 

The Bangles then used the money to pay for personal expenditures. They concealed approximately $981,000 in income from the IRS, which they had a legal obligation to report on their personal income tax returns. Had they accurately reported all their income to the IRS, the Bangles would have owed an additional $336,273.

The Bangles claimed the deposits into their personal checking account were from cash salary earned at the pizza business.

Each of the 30 counts of the indictment carries a maximum potential penalty of five years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation.

The government is represented by Assistant U.S. Attorneys Jason M. Richardson and Matthew T. Smith of the U.S. Attorney's Office Criminal Division in Camden, as well as Assistant U.S. Attorney Peter W. Gaeta of the office’s Asset Forfeiture Unit.

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Defense counsel:

Charles Bangle: Vincent Sarubbi Esq., Haddonfield, N.J.
Mary Bangle: TBD   

Bangle, Charles and Mary Indictment

TRENTON, N.J. – A Georgia man living in Long Island, N.Y., admitted today he traveled from New York to New Jersey to have sexual contact with a minor, U.S. Attorney Paul J. Fishman announced.

Richard J. Simone Jr., 23, of Acworth, Ga., pleaded guilty before U.S. District Judge Mary L. Cooper in Trenton federal court to Count One of an indictment charging him with traveling across state lines for the purpose of engaging in sexual conduct with a minor. Simone has been in custody since his arrest in September 2013.

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

Simone admitted that beginning in July 2013, he engaged in numerous graphic communications over the Internet with an individual he believed was the father of a 9-year-old girl. In those communications, Simone discussed having sex with the girl and her minor babysitter.  The individual with whom he was corresponding was actually an undercover agent from the Department of Homeland Security, Homeland Security Investigations, and both of the minors were fictitious. On Sept. 13, 2013, Simone traveled from Long Island to Monmouth County, N.J., for the purpose of having sex with the two minors. Simone was arrested when he arrived at the location where he and the undercover had arranged to meet.

The count to which Simone pleaded guilty carries a maximum potential penalty of 30 years in prison and a $250,000 fine. He will also be required to register as a sex offender. Sentencing is scheduled for August 6, 2014.

U.S. Attorney Fishman credited agents of Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees in Newark; the West Long Branch Borough Police Department, under the direction of Chief of Police Lawrence L. Mihlon, for the investigation leading to today’s guilty plea. He also thanked HSI New York; U.S. Customs and Border Protection, and the Monmouth County Prosecutor’s Office, for their assistance with the investigation.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov

The government is represented by Assistant U.S. Attorneys Fabiana Pierre-Louis and Harvey Bartle, attorney in charge of the U.S. Attorney’s Trenton Office.

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Defense counsel: Guy L. Womack Esq., Houston, Texas

Simone, Richard Indictment

Defendants Managed “Cash Out” Crews for Organization that Allegedly Capitalized on Information Hacked From Customers of More Than a Dozen Global Financial Institutions

TRENTON, N.J. – An alleged member of an international cybercrime, identity theft and credit card fraud conspiracy admitted today to using information hacked from customer accounts held at more than a dozen banks, brokerage firms, payroll processing companies and government agencies in an attempt to steal at least $15 million from American customers, the second member of the conspiracy to plead guilty this week, U.S. Attorney Paul J. Fishman announced.

Robert Dubuc, 40, of Malden, Mass. – who was in court today – and Oleg Pidtergerya, 49, of Brooklyn, N.Y. – who was in court yesterday, March 31, 2014 – each pleaded guilty to an information charging one count of wire fraud conspiracy, and one count of conspiracy to commit access device fraud and identity theft. Both defendants entered their guilty pleas before U.S. District Judge Peter G. Sheridan in Trenton federal court.

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

Both Dubuc and Pidtergerya were asked by leaders of the conspiracy to participate in a scheme to “cash out” bank accounts and pre-paid debit cards opened in the names of others. Oleksiy Sharapka, 33, of Kiev, Ukraine, allegedly directed the conspiracy with the help of Leonid Yanovitsky, 39, also of Kiev. Pidtergerya managed a cash out crew in New York for Sharapka and Yanovitsky, and defendant Dubuc controlled a cash out crew in Massachusetts for the organization.

Pursuant to the scheme, conspiring hackers first gained unauthorized access to the bank accounts of customers of more than a dozen global financial institutions and businesses, including: Aon Hewitt; Automatic Data Processing Inc.; Citibank N.A.; E-Trade; Electronic Payments Inc.; Fundtech Holdings LLC, iPayment Inc.; JP Morgan Chase Bank N.A.; Nordstrom Bank; PayPal; TD Ameritrade; U.S. Department of Defense, Defense Finance and Accounting Service; TIAA-CREF; USAA; and Veracity Payment Solutions Inc.

After obtaining unauthorized access to the bank accounts, Sharapka and Yanovitsky diverted money from them to bank accounts and pre-paid debit cards they controlled. They then implemented a sophisticated “cash out” operation, employing crews of individuals known as “cashers” to withdraw the stolen funds from the Fraudulent Accounts, among other ways, by making ATM withdrawals and fraudulent purchases in New York, Massachusetts, Illinois, Georgia and elsewhere. Both Sharapka and Yanovitsky are under indictment in the United States and remain at large.

During their guilty plea proceedings, Pidtergerya and Dubuc admitted they were aware fraudulent accounts and cards were created without the consent of the individuals in whose names they were opened. Both men admitted coordinating ATM and bank withdrawals of the stolen funds. In addition they admitted to sending proceeds of the fraud to Sharapka and Yanovitsky in Ukraine.

The government’s ongoing investigation into the organization has so far identified attempts to defraud the victim companies and their customers of more than $15 million.

The wire fraud conspiracy count carries a maximum potential penalty of 20 years in prison, and the conspiracy to commit access device fraud and identity theft count carries a maximum potential penalty of five years in prison. Each count also carries a maximum $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for July 7, 2014, for Pidtergerya and July 8, 2014, for Dubuc.

U.S. Attorney Fishman credited the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; U.S Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees; Department of Defense, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Jeffery D. Thorpe, Cyber Field Office; and IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the ongoing investigation. He also thanked the Department of Homeland Security’s Customs and Border Protection for assistance with the Yarmolitsky arrest.

The government is represented by Economic Crimes Unit Chief Gurbir S. Grewal of the U.S. Attorney’s Office in Newark.

The charges and allegations concerning alleged conspirators are merely allegations and the defendants are presumed innocent unless and until proven guilty.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov. 

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Defense counsel: Oleg Pidtergerya: Mitchell Elman Esq., Port Washington, N.Y.
Robert Dubuc: Angelo Servidio Esq., Nutley, N.J.

Pidtergerya, Oleg Information
Dubuc, Robert Information

NEWARK, N.J. – Two men and a woman from Hudson County, N.J., were indicted today in connection with their roles in two bank robberies that took place last summer, U.S. Attorney Paul J. Fishman announced.

Gary Bohanan, 44, Angel Feliu, 20, and Josephine Chenet, 45, all of North Bergen, N.J., are each charged by indictment with two counts of bank robbery. The indictment was returned by a federal grand jury sitting in Newark.

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

Bohanan, Feliu, and Chenet allegedly robbed the Sovereign Bank (now Santander Bank), in Secaucus, N.J., on July 22, 2013. Bohanan and Feliu entered the bank at 10:11 a.m. Both wore latex gloves on their hands and masks over their face. Once inside, Bohanan brandished a black handgun, jumped over the counter and proceeded to empty two drawers of money into a black bag, while pointing the handgun at bank tellers. As Bohanan emptied the drawers, Feliu stood guard. Bohanan and Feliu then fled the bank into a car driven by Chenet.

Bohanan, Feliu, and Chenet also allegedly robbed the TD Bank, in Fairview, N.J., on July 26, 2013. Bohanan and Feliu, both wearing latex gloves and masks, entered the bank at 9:48 a.m. Feliu was recorded by the Bank’s video surveillance system before he pulled the mask over his face. Once inside the TD Bank, Feliu brandished a knife at employees and customers. Bohanan brandished what appeared to be a black handgun, but was later identified as an air pistol.  Bohanan jumped over the counter and proceeded to empty two drawers of money into a black bag, while pointing the air pistol at bank tellers. As Bohanan emptied the drawers, Feliu stood guard and held bystanders back by brandishing the knife.

Bohanan and Feliu fled on foot and were followed by concerned citizens and victims of the bank robbery. Bohanan encountered a white GMC Savana van, pointed the air pistol at the driver and ordered the driver out of the van. Bohanan then took control of the van and attempted to flee the area by driving away in the van, drove a short distance and crashed. He exited the van and attempted to flee on foot. Law enforcement and concerned citizens located Bohanan hiding under a truck, which was parked a short distance away. Bohanan was found with a black bag containing, among other things, a black air pistol and money covered with red dye.

Feliu separated from Bohanan after the bank robbery and was seen getting into the passenger’s seat of a waiting vehicle that was driven by Chenet. Citizens followed the vehicle as it drove away at a high rate of speed and observed Feliu exit the vehicle and run into a cemetery in North Bergen, where he was located by law enforcement.

The counts of bank robbery with which Bohanan, Feliu, and Chenet are each charged each carry a maximum penalty of 20 years in prison and a fine of $250,000. Bohanan and Feliu have been detained pending trial.

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 the Fairview, North Bergen, and Secaucus police departments for their contributions to the case.

The government is represented by Assistant U.S. Attorney Francisco J. Navarro of the U.S. Attorney’s Office General Crimes Unit in Newark.

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

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Defense counsel: Feliu: Kevin F. Carlucci Esq., Assistant Federal Public Defender, Newark
Bohanan: Carl Herman Esq., West Orange, N.J.
Chenet: Michael Gilberti, Esq., Little Silver, N.J.

Bohanan et al. Indictment

NEWARK, N.J. - A Hunterdon County, N.J., man was sentenced today to 23 months in prison for fraudulently collecting Social Security disability payments while continuing to do work he claimed he was unable to do for his private detective firm, U.S. Attorney Paul J. Fishman announced. 

David Disney, 46, of Alexandria Township and Saddle Brook Township, N.J. – and the former owner of DM Disney & Associates – previously pleaded guilty after one day of trial to one count of theft of government funds contained in the indictment against him. He entered his guilty plea before U.S. District Judge Faith S. Hochberg, who also imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: Disney applied for disability insurance payments in the fall of 2003 as a result of a head injury he suffered in January of that year. In his application, Disney claimed an inability to work, take care of himself or his finances, or even to concentrate for more than five minutes. Based on that application, Disney and his two dependent children were deemed eligible for monthly disability benefit payments to replace his lost income. By signing the application, Disney agreed to notify the Social Security Administration if there was any improvement in his medical condition or if he regained the ability to work and earn income.

During the time that Disney was receiving disability benefits, he continued to perform surveillance for clients of DM Disney & Associates, marketed his business through personal appearances on The Maury Povich Show, testified before the New York State Workers’ Compensation Board on behalf of clients and even applied to renew his New Jersey Private Detective License and purchase a handgun. 

Between 2003 and 2008, Disney collected more than $144,000 in monthly disability payments to which he was not entitled by continuing to make false statements to the Social Security Administration and underreporting the income he was earning.

Disney admitted he took the benefits knowing he was not entitled to them.

In addition to the prison term, Judge Hochberg sentenced Disney to serve two years of supervised release and ordered him to pay a $5,000 fine and $144,000 in restitution to the Social Security Administration.
U.S. Attorney Fishman credited special agents of the Social Security Administration – Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan of the New York Field Division, with the investigation.

The government is represented by Assistant U.S. Attorneys Danielle Alfonzo Walsman and Osmar J. Benvenuto of the U.S. Attorney’s Criminal Division in Newark.

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Defense counsel: James Patton Esq., Livingston, N.J.

NEWARK, N.J. - A Chicago man today admitted he stole more than $1 million worth of iPhones and iPads from Verizon Wireless through an elaborate scheme that involved misappropriating corporate purchasing accounts and then diverting the shipments by bribing Federal Express drivers, U.S. Attorney Paul J. Fishman announced.

Stephen Gunn, 36, pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an indictment charging him with one count of conspiracy to commit wire fraud.

According to documents filed in this case and statements made in court: Gunn accessed the online accounts of dozens of Verizon’s customers, including several customers located in New Jersey, and used those accounts to place unauthorized orders for electronics products, primarily, smart phones and accessories. He directed the fraudulently ordered products be shipped to addresses in Texas, including several addresses that did not exist, via Federal Express.

At Gunn’s direction, two Federal Express drivers intercepted the shipments, removed the contents, and re-shipped the contents to addresses in Illinois provided by Gunn. In exchange, Gunn paid the drivers each thousands of dollars. Gunn fraudulently obtained approximately 1,700 items—including several hundred Apple iPhones and iPads, Blackberry devices, and Motorola phones—worth more than $1 million.

The conspiracy to commit wire fraud count to which Gunn pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gain or loss from the offense. Sentencing is scheduled for July 15, 2014.

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.

The government is represented by Assistant U.S. Attorney Daniel V. Shapiro of the U.S. Attorney’s Office Computer Hacking and Intellectual Property Crimes Section of the Economic Crimes Unit in Newark.

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Defense counsel: David Holman Esq., Assistant Federal Public Defender, Newark

Gunn, Stephen Indictment

CAMDEN, N.J. – A former insurance broker admitted today to conspiring to defraud purchasers of commercial liability insurance by overcharging for policies as well as issuing some customers bogus policies, U.S. Attorney Paul J. Fishman announced.

Thomas M. Grubb Jr., 58, of Voorhees, N.J., pleaded guilty before Chief U.S. District Judge Jerome B. Simandle in Camden federal court to an indictment charging him with one count of conspiracy to commit mail fraud and wire fraud.

Grubb was originally arrested on April 14, 2008, and charged by complaint with one count of obstruction of justice. On Nov. 5, 2008, Grubb failed to appear in court and a warrant was issued for his arrest. 

Special agents of IRS-Criminal Investigation apprehended Grubb in Port Charlotte, Fla., on Dec. 6, 2011.
According to documents filed in this case and statements made in court: Grubb was employed at Aconorate Insurance Agency in Hammonton, N.J., when Aconorate engaged in a scheme to defraud its clients by overcharging them for commercial liability insurance and selling them policies that were not issued by a legitimate insurance carrier. Grubb – along with the individuals identified in court documents as “CC-1,” the owner of Aconorate, and “CC-2,” an information technology employee at Aconorate – procured insurance for Aconorate commercial liability insurance clients through an insurance broker in Texas, identified as “GM.”  Many of the clients were bars, restaurants, and nightclubs.

Grubb and the owner of Aconorate substantially inflated the premiums that they charged these customers, sometimes increasing the quote that GM provided by as much as 700 to 800 percent. Between June 2004 and July 2006, Grubb and the owner of Aconorate collected more than $1 million dollars in premiums for commercial liability insurance procured through GM and kept over $597,000 of the premiums for themselves. 

Grubb and others also took steps to create the appearance that the insurance companies purportedly issuing the policies were legitimate, including creating websites, mailing addresses, and telephone numbers for the insurance companies, and setting up their own mechanism to pay claims.   

The mail fraud and wire fraud conspiracy charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine.  Sentencing is scheduled for July 30, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, Newark field office, with the investigation leading to today’s guilty plea. 

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

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Defense counsel: Anne Singer Esq., Haddonfield

Grubb, Thomas Indictment

TRENTON, N.J. – A Jersey City man admitted today to committing an armed robbery of a jewelry store in Hudson County, N.J., U.S. Attorney Paul J. Fishman announced.

Mouhamadou Lamine Amar, 20, pleaded guilty before U.S. District Judge Mary L. Cooper in Trenton federal court to an indictment charging him with committing a Hobbs Act robbery and with brandishing a firearm during the robbery.

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

On June 28, 2013, Amar entered a jewelry store in Jersey City and held a gun to a store employee’s head. He grabbed and pushed the employee when the employee tried to flee. He tied up the employee and threatened to shoot the employee if the employee tried to escape. Amar was arrested inside the store while still in possession of the firearm.

The Hobbs Act robbery count to which Amar pleaded guilty carries a maximum potential penalty of 20 years in prison. The count of brandishing a firearm during a violent crime carries a maximum 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 count also carries a maximum $250,000 fine or twice the gross gain or loss arising out of the offense. Sentencing is scheduled for July 10, 2014.

U.S. Attorney Fishman credited special agents, detectives and investigators assigned to the Joint Terrorism Task Force (JTTF), under the direction of FBI Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea. The JTTF comprises law enforcement officers from numerous federal, state and local agencies throughout New Jersey. U.S. Attorney Fishman also thanked the Jersey City Police Department and the Hudson County Prosecutor’s Office for their work on this case.

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

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Defense counsel: Jeffrey B. Steinfeld Esq., Newark                

Amar, Mouhamadou Lamine Indictment

CAMDEN, N.J. - A Bridgeton, N.J., tax preparer today admitted he knowingly failed to report more than $300,000 diverted from his tax preparation service for his personal use, U.S. Attorney Paul J. Fishman announced.

William Jones, 67, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with one count of income tax evasion.

According to documents filed in this case and statements made in court: Jones admitted that he operated Your Financial Services and PLM Tax Services, both Bridgeton businesses that provided tax return preparation and payroll services for their clients. Your Financial Services provided refund anticipation loans backed by Refund Advantage, a company that processed income tax returns and provided refund anticipation loans for smaller tax offices.

From 2007 through 2010, Jones offered Your Financial Services’ clients refund anticipation loans processed by Refund Advantage for which Jones received fees and additional yearly incentives. Since Your Financial Services was a Schedule C business, Jones was required to report the income generated by Your Financial Services on his U.S. individual income tax return.

However, for the years 2007, 2008, 2009, and 2010, Jones only reported to the IRS Form W-2 wages, property tax information, and interest and dividend income, omitting all of the diverted payments from Refund Advantage made to Your Financial Services. He admitted that he deposited the business receipts into his personal bank account and used the money for personal expenditures. 

From 2007 through 2010, Jones admitted that he diverted a total of $310,248 in gross receipts of Your Financial Services into his personal bank account. He would have owed the government $90,266 in taxes had he reported the additional gross receipts on his income tax returns.   
   
The charge to which William Jones pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for July 1, 2014.

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

The government is represented by Assistant U.S. Attorney Jason M. Richardson of the U.S. Attorney's Office Criminal Division in Camden.

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Defense counsel: Christopher O’Malley Esq., Camden

Jones, William Information

NEWARK, N.J. – An Allentown, Pa., man previously charged with sex trafficking of a minor today admitted his role in coercing women to travel from Pennsylvania to New Jersey to engage in prostitution and sexual activity for which any person can be charged with a crime, U.S. Attorney Paul J. Fishman announced.     

Francisco Torrellas, a/k/a “Francisco Fordham Jr.,” “Dream,” “Daddy,” and “Pretty,” pleaded guilty before U.S. District Judge Claire C. Cecchi to Count Nine of a 10-count superseding indictment, which charged him with one count of coercion and enticement to engage in prostitution. He agreed to a sentence of 10 years in prison as part of his plea.

According to the superseding indictment and other documents filed in court:

From November 2010 to February 2013, Torrellas allegedly conspired with others to operate a prostitution business in New Jersey, Pennsylvania and elsewhere. Torrellas managed the business, traveled, and caused prostitute employees, including a minor, to travel interstate for the purpose of engaging in sex acts in exchange for money.   

Torrellas used the Internet to post advertisements for sexual services on the website Backpage.com. Torrellas also developed rules for the prostitutes, booked hotel rooms, and, while incarcerated, used the phone to manage, promote, and carry on his prostitution business, specifically causing his conspirators and others to direct the proceeds of the business to his commissary account at the Essex County Correctional Facility. Torrellas also attempted to influence, delay or prevent the testimony of another person or persons in connection with the case against him.

The conspiracy count carries a maximum potential penalty of five years in prison. The Travel Act counts each carry a maximum potential penalty of five years in prison. The counts relating to trafficking and transportation of a minor carry a mandatory minimum penalty of ten years in prison and a maximum penalty of life imprisonment. The count relating to coercion and enticement to engage in prostitution carries a maximum potential penalty of 20 years in prison and the count charging obstruction of justice carries the maximum term that could have been imposed for the offenses charged. The defendant also faces 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 July 15, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and the Secaucus, Jersey City, and the Allentown, Pa., police departments with the investigation leading to today’s guilty plea. 

The government is represented by Assistant U.S. Attorneys Danielle Corcione and Jenny Kramer of the U.S. Attorney’s Office Criminal Division in Newark.

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Defense counsel: Michael N. Pedicini Esq., Chatham, N.J.

Torrellas, Francisco SIndictment

NEWARK, N.J. – One of the operators of Clevett Worldwide Mailers LLC, a Succasunna, N.J., bulk mailing house, was sentenced today to 18 months in prison for defrauding clients of more than $1 million through a fraudulent bulk-mailing scheme in which he shredded millions of pieces of mail rather than delivering them, U.S. Attorney Paul J. Fishman announced.

Harold Clevett, 68, of Middlesex, N.J., previously pleaded guilty before U.S. District Judge Kevin McNulty to an indictment charging him with one count of conspiracy to commit wire fraud. Judge McNulty imposed the sentence today in Newark federal court.

Clevett’s son, Mark Clevett, 37, of Randolph, N.J., who owned and operated the business with his father, also previously pleaded guilty to the same charge and was sentenced to 24 months in prison on Feb. 24, 2014.

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

Mark Clevett owned, and both Clevetts operated, Clevett Worldwide Mailers, which contracted with international and domestic customers to handle large mailings. Customers sent their mail jobs to Clevett Worldwide Mailers for sorting, addressing and delivery to the post office. The company received fees for each piece of mail and for the total weight of the mail that it handled.

Both father and son admitted that rather than sending their clients’ mail as contracted, they directed their employees to throw away all or part of it, and even called in a shredding company to destroy unsent mail.

Mark and Harold Clevett also acknowledged they charged their customers for the full amount of the mailings, even sending some of their customers fraudulent postal forms to make it appear as though the mailings were delivered. The pair admitted that between 2007 and June 2011, they discarded and shredded nearly 3 million pieces of customer mail and reaped nearly $1 million in illicit profits.

In addition to the prison term, Judge McNulty sentenced Harold Clevett to serve one year of supervised release, six months of which will be home confinement and ordered him to pay restitution of $999,461.

U.S. Attorney Fishman credited postal 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 sentencing.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Michael Robertson of the U.S Attorney’s Office in Newark. 

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Defense counsel: Harold Clevett: Brian J. Neary Esq., Hackensack, N.J.
Mark Clevett: Don Larsen Esq., Montville, N.J.

Multiple Arrests Made in Coordinated Takedown

TRENTON, N.J. – The New Jersey U.S. Attorney’s Office has charged 21 members and suppliers of a large-scale drug trafficking organization allegedly responsible for distributing heroin and cocaine throughout New Jersey’s Monmouth and Ocean counties, U.S. Attorney Paul J. Fishman announced today.

The alleged leaders of the conspiracy, Robert Britt, a/k/a “True,” 44; and Rufus Young, a/k/a “Equan,” a/k/a “E-Money,” a/k/a “Kintock,” 41, both of Asbury Park, N.J., were among the 19 defendants charged in a complaint unsealed today, 13 of whom were arrested this morningas part of a takedown coordinated by federal and local law enforcement authorities. Britt has been incarcerated in New Jersey in connection with New Jersey state offenses since April 2013.Three of those charged are fugitives and the remaining defendants were already in custody.

Thomas Shannon, a/k/a “Cuzzo,” 35, of Asbury Park – who is also charged in today’s complaint with Britt and Young – was arrested along with Anthony J. Brooks, 44, of San Bernardino, Calif., and Rashawn Ramos, 37, of Perth Amboy, N.J., March 20, 2014, on a separate complaint charging related offenses.

Each defendant (see attached chart) was charged with one count of conspiracy to distribute one kilogram or more of heroin. Those arrested today are scheduled to make their initial court appearances this afternoon before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court. Those arrested on March 20, 2014, have been in federal custody since their arrests and will appear before Judge Bongiovanni at a later date.

 “This case highlights what has become all too clear: heroin is a serious problem that affects communities across New Jersey,” U.S. Attorney Fishman said. “Working with our state and local partners, federal law enforcement will continue to track the purveyors of this poison wherever they set up shop.”

“We are all aware that crimes like the ones alleged in these complaints pose a significant and increasing threat to the public health and safety of our communities,” FBI Newark Special Agent in Charge Aaron T. Ford said. “The arrests today signify the growing efforts of the FBI and our state and local partners, to combat these organizations and make our communities safe for all.  Cooperation between dedicated groups of law enforcement partners is, and will continue to be, a critical factor for successfully defending threats that endanger our communities.”

According to the federal criminal complaints filed in Trenton federal court:

From February 2013 through March 2014, the defendants engaged in a drug distribution conspiracy to profit from the distribution of controlled substances – chiefly heroin – in Ocean and Monmouth counties. Through the authorized interception of cell phone calls, the use of confidential informants and other means, law enforcement learned Britt and Young were leaders of the drug trafficking organization (the Britt-Young DTO), responsible for identifying sources of heroin supply. Britt and Young also oversaw distributors and other conspirators, who sold, packaged and stored the drugs. Members used temporary prepaid phones, replacing them after a few weeks of use, and spoke in code to avoid detection by law enforcement. Britt continued to communicate with Young to oversee and participate in the conspiracy, including identifying new sources of supply, narcotics customers, and other unlawful opportunities for the Britt-Young DTO, even after he was incarcerated.

The Britt-Young DTO sold prepackaged bundles of heroin, containing approximately one-fifth of a gram, and “bricks,” which contained approximately one gram. Discussions about drug quality, consumer satisfaction, pricing and the nature of the drug distribution business were captured on calls recorded by law enforcement.

The Britt-Young DTO acquired heroin from various suppliers, including Shannon, who obtained narcotics from out of state suppliers and laundered the sale proceeds. Shannon received kilogram quantities of heroin and cocaine from Brooks and others, who shipped the drugs to him through the mail. The drug packages were sent to Ramos’ residence in New Jersey and he then contacted Shannon to retrieve the packages. Shannon then took the narcotics to stash houses he controlled in Asbury Park and Long Branch, N.J. Shannon deposited cash from his narcotics sales into various third-party “straw” bank accounts and Brooks and other conspirators withdrew the funds at bank locations in California.

On March 20, 2014, law enforcement executed search warrants at Shannon’s stash houses and seized more than one kilogram of heroin, a half-kilogram of cocaine, 30 grams of crack cocaine, and various narcotics-related paraphernalia, including grinders, empty baggies, scales and other items used to package and prepare heroin and cocaine for distribution, as well as three firearms.            

“Heroin continues a major contributing factor in much of the crime in Brick Township,” Brick Township Police Chief Nils R. Bergquist Jr. said. “We recognize the people who distribute heroin don’t recognize borders and often come from places other than Brick. Our ability to partner with the FBI and Safe Streets Task Force has allowed us to interrupt a significant source of heroin coming into Brick Township. This investigation should serve as a model of how federal, state and local agencies should come together.”

“In our local fight against narcotics we are pleased to have an excellent working relationship with the FBI as well as the New Jersey U.S. Attorney’s Office,” Toms River Police Chief Mitchell Little said. “The effort to rid society of drugs cannot be fought on a single front, and this cooperative effort goes to show how effective law enforcement agencies can be when we use a team approach.”

The conspiracy count with which each defendant is charged carries a minimum potential penalty of 10 years in prison, a maximum of life in prison, and a $10 million fine.

The conspiracy count in the earlier complaint with which Shannon, Ramos and Brooks are charged, and the possession of controlled substances count with which Shannon is charged, also carry a minimum potential penalty of five years in prison, a maximum of 40 years in prison, and a $5 million fine. Shannon and Brooks are also charged in a money laundering conspiracy count that carries a potential penalty of up to 20 years in prison and $500,000 fine.

“Our undercover narcotic operations beyond the borders of Ocean County and the solid interagency partnerships we have developed are beginning to yield substantial success in stemming the flow of illegal narcotics into Ocean County,” Joseph D. Coronato, Ocean County Prosecutor, said. “This type of multiagency operation, striking at the top level distribution leadership, is the most significant way to address the ever increasing heroin epidemic threatening our families in this county, state and nation.”

“These defendants are responsible for delivering the heroin that has been killing people in record numbers,” Acting Monmouth County Prosecutor Christopher J. Gramiccioni said. “They were profiting off the addiction of heroin by supplying cheap and easy access to anybody with a few bucks in their pocket.”

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Office, under the direction of Special Agent in Charge Ford; officers of the Brick Township Police Department, under the direction of Chief Bergquist: and officers of the Toms River Police Department, under the direction of Chief Little, with the investigation. He additionally credited special agents of the Bureau of Alcohol Tobacco Firearms and Explosives, under the direction of Acting Special Agent in Charge George Belsky; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; officers of the Monmouth County Prosecutor’s Office, under the direction of acting Prosecutor Gramiccioni; and officers of the Ocean County Prosecutor’s Office, under the direction of Prosecutor Coronato. He also thanked the Monmouth County Sheriff’s Office and the Neptune Township, Asbury Park, Marlboro, Long Branch and Freehold police departments for their roles in the case.

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

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

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Defendant

Age

Residence

44

Asbury Park, N.J.

Rufus Young, a/k/a “Equan,” a/k/a “E-Money,” a/k/a “Kintock”

41

Asbury Park

Thomas Shannon, a/k/a “Cuzzo”

35

Asbury Park and Jersey City, N.J.

Jonathon Thomas, a/k/a “Life”

38

Neptune, N.J.

Antoine Harris

33

East Orange, N.J.

Tyshon Young, a/k/a “Young Boy,” a/k/a “Young Money”

28

Asbury Park

Jason O’Neal, a/k/a “Born”

41

Farmingdale, N.J.

Travis Whitfield, a/k/a “Trav”

29

Brick, N.J.

Jamar Johnson, a/k/a “Rep”

35

Lakewood, N.J.

Dawn Rosser

33

Lakewood

Valerie Resendes, a/k/a “Val”

26

Beachwood, N.J.

Melissa Piana

31

Toms River, N.J.

*Tyree Murray

26

Bayville, N.J.

Kenneth Greenhow, a/k/a “Fame”

40

Asbury Park

*Robert Ketcham

27

Bayville

Richard Durham

27

Brick

Kyle Adams

27

Barnegat, N.J.

Kareem Hayes, a/k/a “Bless”

33

Belmar, N.J.

*Matthew Miller, a/k/a “Star”

39

Neptune

Anthony Brooks

44

San Bernadino, Calif.

Rashawn Ramos

37

Perth Amboy, N.J.

*denotes fugitive

Britt-Young DTO Complaint
Shannon Complaint

RUTGERS, LIVINGSTON CAMPUS, PISCATAWAY, N.J.

Good morning. Thank you, Andrew [Carey], for that introduction. During the three and a half years we worked together in the US Attorney’s Office, I got to see first-hand your dedication to the fight against violent crime and am delighted to have you as a partner. I want to thank John [Farmer], whom I have known now for more than 20 years. He has had a remarkable career in public service and I am proud to call him a close friend. And thank you to Rutgers – and by that, I mean all of you who work so hard here – for hosting this very important gathering.

Exactly three months ago, on Christmas Day, Zainee Hailey – a 13-year-old girl, an honor student, a cheerleader, a member of her church’s youth choir – took out the garbage and never came back. She was an innocent bystander, shot and killed by a bullet meant for a boy who was only a year or two older than she was.

One Saturday night, in early August, Barry Church was sitting on his front stoop with his son, enjoying a warm summer night. A stray bullet struck him in the side of his chest and killed him. That same night, Carmen Wright was crossing a street in Trenton when she was struck by a car that was out of control because the driver had been shot in the neck and his foot was stuck on the accelerator.

Ten days before Christmas, Dustin Friedland was gunned down in front of his new wife during a carjacking in the parking garage of the Short Hills Mall.

And on a September afternoon, three men in Camden, armed with an AK-47, sprayed 14 rounds across a park toward a housing project and hit a school bus filled with 35 preschoolers.

These stories resonate because they are the tales of the innocent – a young, teenage girl; a newly married husband Christmas shopping; a group of preschoolers on a bus. And even to a public that is used to hearing reports of violence almost every night on the news, hardened because those acts are so frequent, these stories shock us – the acts are so senseless, the consequences so stunning, that they stop us in our tracks. We are here for them.

But, as awful as those crimes are, everyone here knows they are the tip of the iceberg.  There were 37 homicides last year in Trenton – a record for that city. There were 111 in Newark – the highest number in a quarter of a century – not to mention the almost 400 carjackings in and around that city, which is a level that exists nowhere else in the country. While some cities like Elizabeth, Atlantic City, and Camden did better than in 2012, Camden’s homicides still numbered 57 – a ridiculously high count for a city of that size. We don’t always – or maybe even often – hear about all of those victims. We are here for them too.

And all across the state – in communities like Asbury Park, Jersey City, Bridgeton and Plainfield – honest, hardworking mothers and fathers – and kids – live every day with an unacceptable level of violence. We are here for them.

Over the last four years, we have brought some very successful cases in federal court, and we will continue to focus relentlessly on the most violent offenders who are causing the most harm and wreaking the most havoc. The Dirty Block case in Atlantic City, the MS-13 case in Plainfield, the Southside Cartel case in Newark are just three examples of major ongoing prosecutions of gangs responsible for serious violence and the drug dealing that fuels it. We have worked with every county prosecutor in this room and with the local police in their jurisdictions to identify the most dangerous criminals in those communities and to try to take them off the streets. We have collaborated with every level of law enforcement – including, of course, Attorney General Hoffman and his office – to meet this challenge, using innovative methods and new ideas to complement old-fashioned police work. I have seen extraordinary things from what we call C-4, our unprecedented fusion center in Camden; from the various VEST (that’s Violent Enterprise Source Target) efforts around the state; and from the other inventive policing strategies you will hear more about today. And I want to thank all of the members of federal, state, county and local law enforcement who have made time to be here today; I am proud of you and their colleagues for your dedication and hard work.

But as talented as they and their colleagues are, and as successful as they’ve been, we all understand that law enforcement, acting alone, is not the answer. As my friend (and my boss), Attorney General Eric Holder, is fond of saying, we will never arrest our way out of this problem. Every great cop or agent, and every experienced prosecutor, knows that we just can’t do our jobs – we can’t win this fight – without the help, support and partnership of the community members we serve. While it is true that the violence is fueled by gangs, drugs and guns, we all recognize that towns with inadequate housing, communities with too few jobs, schools that are underperforming and dangerous and parks that are littered with needles and shell casings are not going to nurture a culture that is safe and secure. We know that there are thousands of law abiding, good people in those communities, aching for streets that they can walk in, schools that are safe and playgrounds where their children can actually play. But to help them reclaim the neighborhoods that they deserve – to give the children of those neighborhoods hope – we need to work with them, and they need to work with us.

This isn’t a new idea – not in New Jersey, and not to federal law enforcement officials.  Back in my last tour in the U.S. Attorney’s Office, in the early 1990s, Trenton was the pilot project for a program called Weed and Seed. Funded by the Department of Justice, we developed a real partnership among my office, the State Attorney General, and the City of Trenton. We combined intensive community policing and stepped up drug enforcement in areas around three schools, which stayed open late into the evening so they could function like real community centers. Those neighborhoods were also the focus of extra housing rehabilitation and enhanced cultural activities. We called those schools “Safe Havens” – and we wanted to turn them into exactly that for the people in that community.

While that program is over, the concept – that those of us in law enforcement must seek out those in local government, non-profits, health and religious institutions, schools and treatment centers – the idea that we will achieve more together – that is what today is all about.

Today’s program is designed to emphasize that strategy and some of its pieces.  First, we’re going to talk about enforcement strategies around the state – what’s working and what’s not. And I suspect what you’ll hear is that we have been most successful when we share intelligence, work hand-in-hand, and figure out together where each agency can most effectively deploy its resources in combination with everyone else. The goal is to be smart, and nimble, and efficient – making sure that violent and career offenders will continue to receive tough penalties.

There needs to be an emphasis on real community policing. From my days working on Weed and Seed, I know how vital it is for people in a neighborhood to have a real relationship with the cop on the beat. I know my good friend Scott Thompson, the Chief of the Camden County Police Department, will have a few things to say about that.

And we need to constantly think about crime prevention in a comprehensive way. An after school program for at-risk kids is crime prevention. Midnight basketball is crime prevention; and so is drug treatment; and the new inspiring federal reentry court we’re running in Newark. The various ceasefire programs that are being implemented in various forms in Newark, Trenton and Camden are exactly what we should be talking about.

But it’s broader than that too. The Choice Neighborhood grants that HUD gives out to places like Jersey City and Camden are a form of prevention – creating safe, affordable housing, while encouraging stable and responsible residents. And the grants from the Department of Education for Promise Neighborhoods in the Fairmount section of Newark and Cooper Lanning in Camden are targeted at kids in distressed communities who need better opportunities and a guiding hand. And that’s crime prevention.

But let me tell you something you already know: this is hard work. It is hard for law enforcement officers to work long hours investigating homicides and gang activity and to arrest the people responsible, only to have a new group take over and continue the violence.

It is hard for community groups to attract investment into their neighborhoods and clean up parks so their children can have a safe place to play, only to have drug dealers take over those parks and investors leave because a neighborhood is too dangerous.

It is hard, in a time of real fiscal challenge, to find the money to do what we need and accomplish what we want. Layoffs, tight budgets, reduced endowments – all make it that much more difficult to put boots on the ground and shovels in the ground.

And it is hard to break out of our silos, to try to figure out how other organizations work, and to decipher how people from other disciplines think and approach the same problems from different angles. There are personalities to mesh; priorities to work out; money to tussle over; and – yes – other acronyms to learn.

But this work is too important, the mission too critical, and the stakes too high for any of us to be frustrated by those obstacles.

So today, we will – I hope – make some real strides to overcome them. We will talk about ways to engage the people in our communities – to build their trust so that they are willing to help law enforcement identify and remove the worst offenders from their neighborhoods. We will discuss how law enforcement can improve lines of communication with the people, businesses and other institutions we serve so that we can focus our resources on where they can make the biggest difference. We’ll listen while service providers explain what they need from each other to reinforce their respective goals. And we’ll brainstorm about ways in which to come up with money to make it all just a little bit easier to accomplish.

I don’t know everyone here. But the many I do know come to the table, come to this room, come to this fight with energy, with commitment, with passion, with dedication and with insight. And I also know that everyone who is here understands that developing partnerships with other people and organizations – working for the same goals in the same neighborhoods – provides a new richness, diversity and thoughtfulness to our programs, and dramatically improves our chances of success. We can combat these problems so much more effectively by working together.  And I am thrilled that so many of you are willing to join us.

Thank you for coming.

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25th Defendant to Plead Guilty in Connection with Scheme

NEWARK, N.J. – A pediatrician with a New York practice in Staten Island and Brooklyn admitted today he accepted bribes in exchange for test referrals as part of a long-running scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, N.J., its president and numerous associates, New Jersey U.S. Attorney Paul J. Fishman announced.

Surender Gorukanti, 46, of Brooklyn, pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes. 

Including Gorukanti, 25 people – including 14 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.

Gorukanti admitted he accepted checks of $1,000 per month as bribes from BLS in return for referring patient blood specimens to BLS.

The bribery count to which Gorukanti pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 16, 2014. As part of his guilty plea, Gorukanti agreed to forfeit $14,000, representing the bribes he received from BLS.

The investigation has recovered more than $7 million to date through forfeiture.

U.S. Attorney Fishman credited special agents of the New Jersey FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; 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 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 $535 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: Thomas Tormey Esq., New York

Gorukanti, Surender Information