District of New Jersey

NEWARK, N.J. – A Hudson County, N.J. man was sentenced today to 120 months in prison for using video chat programs to persuade a minor girl to engage in sexual conduct, U.S. Attorney Paul J. Fishman announced.

Paul R. Kleinman, 34, of Jersey City, N.J. and Verona, N.J., previously pleaded guilty before U.S. Magistrate Judge Michael A. Hammer to an information charging him with coercing and enticing a minor to engage in sexual activity. U.S. District Judge Faith S. Hochberg imposed the sentence today in Newark federal court.   

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

Kleinman admitted that from September 2012 through October 2012, he communicated with a female minor through Skype and FaceTime applications on his tablet and computer. During these online communications, Kleinman instructed the minor to perform sexual acts on herself while he watched. 

In addition to the prison term, Judge Hochberg sentenced Kleinman to seven years of supervised release.   

U.S. Attorney Fishman credited special agents of the United States Department of Homeland Security, under the direction of Special Agent in Charge Andrew M. McLees, the Union County Prosecutor’s Office under the direction of Acting Prosecutor Grace Park, the Roselle Park Police Department under the direction of Chief Paul Morrison and the Royal Canadian Mounted Police under the direction of Commissioner Bob Paulson with the investigation leading to today’s sentencing. 

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.

14-051                                                 

Defense counsel:  Anthony Macula Esq., Nutley, N.J.

Plea Stems from an FBI Undercover Sting Operation

NEWARK, N.J. – A Staten Island, N.Y., man admitted today his role in the theft of a trailer containing 270 cases of counterfeit cigarettes that were part of an FBI undercover sting, U.S. Attorney Paul J. Fishman announced.

Augustine “Augie” Guido, 73, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an information charging him with conspiracy to commit cargo theft. Guido and seven other conspirators were previously arrested and charged by complaint on Dec. 19, 2012. Guido was released on a $100,000 bond after his arrest.

According to documents filed in this case and statements made in court: A cooperating witness (CW One) secretly wore a recording device and consensually recorded conversations with various people. CW One assisted federal agents in multiple districts by providing material information, intelligence, and evidence concerning members and associates of La Cosa Nostra and their criminal activities.

On Jan. 27, 2010, CW One and Guido attended a funeral in New York. Guido engaged in a consensually recorded conversation with CW One, asking if CW One was aware of any warehouses that they could rob. Guido said he was interested in stealing perfume, cigarettes and pharmaceuticals.

CW One participated in an FBI sting operation in which Guido and others conspired and stole a tractor-trailer loaded with 270 cases of counterfeit Pall Mall and Lucky 7 cigarettes. The cigarettes were placed in the back of a tractor-trailer at a locked trucking facility in Edison, N.J. Federal agents placed video cameras and other evidence gathering equipment in and around the facility.

On various occasions before July 31, 2010, Guido and his conspirators met to discuss the plan to steal the cigarettes. These meetings were consensually recorded by CW One.
 
On July 31, 2010, law enforcement officers conducting surveillance near the Edison location observed Guido and his conspirators unlawfully enter the trucking facility. The conspirators, who were wearing masks, drove a tractor into the facility, attached it to a trailer full of cigarettes, and then departed the facility. Guido used a hand-held walkie-talkie to communicate with other members of the conspiracy during the heist. The trailer was dropped off at a warehouse located in Perth Amboy, N.J.  Law enforcement officers executed a search warrant at the warehouse and recovered 52 full boxes, with each box containing approximately 50 cartons of the cigarettes.

At the plea hearing, Guido admitted his involvement in the conspiracy to steal the cigarettes from the Edison trucking facility, including planning the theft with other individuals over several months.
Two other conspirators, John S. Dicrescento, 33, of Staten Island, and Anthony Gerbino, 52, of North Valley Stream, N.Y., also pleaded guilty to their roles in the heist. Charges against the other five defendants are still pending.

The conspiracy charge to which Guido pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Guido is scheduled to be sentenced June 4, 2014.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s guilty plea. He also thanked the N.J. State Police; IRS-Criminal Investigation; the U.S. Department of Labor; the Waterfront Commission of New York Harbor; N.J. State Commission of Investigation; and the Bayonne Police Department for their roles in the investigation.

As to the remaining defendants, the charges and allegations contained in the complaints are merely accusations, and they are presumed innocent unless and until proven guilty.
The government is represented by Assistant U.S. Attorneys David M. Eskew and Anthony Moscato of the New Jersey U.S. Attorney’s Office Criminal Division in Newark.

14-050                                                          

Defense Counsel: Roy B. Greenman Esq, Union, N.J.

Guido, Augustine Information

CAMDEN, N.J. - A former chief executive officer of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey – today admitted his role in a scheme to pay bribes to foreign government officials and defraud PetroTiger.
 
U.S. Attorney Paul J. Fishman of the District of New Jersey, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division, made the announcement.

Knut Hammarskjold, 42, of Greenville, S.C., a former co-CEO of PetroTiger, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court to an information charging him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud. Gregory Weisman, 42, of Moorestown, N.J., the former general counsel of PetroTiger, pleaded guilty to the same charges on Nov. 8, 2013.  Charges remain pending against Joseph Sigelman, 42, of Miami, Fla., and the Philippines, the other former co-CEO of PetroTiger, for conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money and substantive violations of the FCPA.

According to the charges, the defendants allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million.  To conceal the bribes, the defendants first attempted to make the payments to a bank account in the name of the foreign official’s wife, for purported consulting services she did not perform.  The charges allege that Sigelman and Hammarskjold provided Weisman invoices including her bank account information.  The defendants made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed.

In addition, court documents allege that the defendants attempted to secure kickback payments at the expense of PetroTiger’s board members.  According to the criminal charges, the defendants were negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition.  In exchange for negotiating a higher purchase price for the acquisition, two of the owners of the target company agreed to kick back to the defendants a portion of the increased purchase price.   According to the charges, to conceal the kickback payments, the defendants had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments, and used the code name “Manila Split” to refer to the payments amongst themselves.

Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013.  Hammarskjold was arrested Nov. 20, 2013, at Newark Liberty International Airport.  Sigelman was arrested on Jan. 3, 2014, in the Philippines. The charges against Sigelman, Hammarskjold, and Weisman were unsealed on January 6, 2014.

The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost.  The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost. Sentencing for Hammarskjold is scheduled for May 16, 2014.

As to the charges in the complaint pending against Sigelman, they are merely accusations and the defendant is presumed innocent unless and until proven guilty.

The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter. The department also thanks the Republic of the Philippines, including the Bureau of Immigration, for its assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.

The case is being investigated by the FBI’s Newark Division. The case is being prosecuted by Assistant U.S. Attorney Aaron Mendelsohn of the District of New Jersey and Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section. 

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

14-049                                                          

Defense counsel: Hammarskjold: Kevin G. Walsh Esq., Newark
Sigelman: Andrew C. Lourie Esq., Washington, D.C., and William A. Burck Esq., Washington, D.C.

Gregory Weisman: Michael A. Schwartz Esq., Philadelphia, Pa.

Hammarskjold, Knut Information

NEWARK, N.J. - A Burlington County, N.J., woman who used a debit card fraud scheme to steal more than $500,000 from clothing retailers was sentenced today to 36 months in prison, U.S. Attorney Paul J. Fishman announced.
 
Temeshia McDonald, 29, of Mount Holly, N.J., previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging her with one count of access device fraud.  As part of the sentence, McDonald was ordered to pay $557,690.18 in restitution to the retailers victimized by her fraud, including Victoria’s Secret, Banana Republic, Wet Seal, and BCBG.  Judge Wigenton imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: McDonald took advantage of a particular type of debit card transaction known as a “forced sale,” which is used from time to time in regular business dealings and is described briefly below.
 
Ordinarily, when a merchant swipes a credit or debit card, a computerized check is performed to determine whether the account associated with the card is valid.  If the account is open and funds are available, the transaction goes through; if the account is closed or funds are unavailable, the transaction is denied.  If the transaction is denied, a merchant has two choices:  ask the customer for another card, or perform a “forced sale” using the declined card.  During a typical forced sale, the merchant calls the card issuer (i.e., the customer’s bank or credit card company) and receives an authorization code.  The merchant types the code into the credit card terminal and “forces” the transaction, essentially overriding the denial and allowing the sale to go through.  At some later date, the merchant and the card issuer settle the outstanding charge.
 
But for technical reasons relating to the forced sale process, it does not actually matter what code the merchant types into the terminal.  Any combination of digits will override the denial.  So long as the customer provides a fake authorization code and convinces the merchant to enter it into the terminal, the transaction will go through.  The merchant is unlikely to discover the fraud until days or weeks later. 

From April 2011 to September 2012, Defendant McDonald convinced retail merchants to “force” more than 500 transactions on her behalf, totaling more than $800,000 in attempted credit card purchases.  Defendant McDonald used this “forced sale” scheme to obtain gift cards, clothes, and accessories from a variety of retail stores, including Victoria’s Secret, Wet Seal, Banana Republic, and BCBG, in New Jersey and other states.

In McDonald’s case, when the cashier finished ringing up McDonald’s goods, McDonald would provide an expired or counterfeit card.  The transaction would be denied.  McDonald would then pretend to call the card issuer and/or claim to possess an “authorization code” that would allow the purchase to go through. The cashier would then enter the code, thereby forcing the sale and permitting the purchase.  Only later, when the merchant and the credit card company attempted to settle the charge, would the retail store realize that McDonald had provided a fake code.

In addition to the prison term, Judge Wigenton sentenced McDonald to three years of supervised release and ordered her to pay restitution of $557,690.

U.S. Attorney Fishman credited special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge James Mottola, with the investigation leading to today’s sentencing.

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

14-048                                                           

Defense counsel: Lorraine Gauli-Rufo Esq., Assistant Federal Public Defender, Newark

McDonald, Temeshia Complaint
McDonald, Temeshia Information

NEWARK, N.J. – The leader of a fraud ring that engaged in identity theft and financial crimes which have led to charges against 54 individuals was sentenced today to 144 months in prison for directing the large-scale, sophisticated criminal enterprise, U.S. Attorney Paul J. Fishman announced.

Sang-Hyun Park, a/k/a “Jimmy,” 48, of Palisades Park, N.J., previously pleaded guilty before then-U.S. Magistrate Judge Patty Shwartz to a five-count information charging him with conspiracy to unlawfully produce identification documents and false identification documents (Count One); conspiracy to commit wire fraud affecting financial institutions and bank fraud (Count Two); aggravated identity theft (Count Three); money laundering (Count Four); and conspiracy to defraud the Internal Revenue Service (Count Five). U.S. District Court Judge Katharine S. Hayden imposed the sentence today in Newark federal court.

“Sang-Hyun Park presided over a criminal enterprise that was extraordinary in its scope and complexity,” U.S. Attorney Fishman said. “The crimes for which he was sentenced today put us all at risk, not just because of the cost to our financial institutions, but also because of the threat posed by fake identification documents. Fortunately, the law enforcement agents and prosecutors who target identity theft and organized crime were just as patient and painstaking as the defendants who designed and executed this scheme, Mr. Park today joins dozens of his criminal conspirators in federal prison.”

“Sang Hyun Park was the mastermind behind multiple, complex, fraudulent schemes that affected numerous financial institutions and individual victims,” FBI-Newark Special Agent in Charge Aaron T. Ford said. “In doing so, he exploited the close ties of the community he lived in. The severity of the sentence imposed today speaks to the outstanding efforts of the FBI, IRS, DHS-HSI, and the United States Attorney's Office who uncovered, investigated and prosecuted Park and all of his co-conspirators who participated in these schemes.”

According to documents filed in these cases and statements made in court:

Park was the leader of a criminal organization (the “Park Criminal Enterprise”) headquartered in Bergen County, N.J., that obtained, brokered, and sold identity documents to customers for the purpose of committing credit card fraud, bank fraud and tax fraud. As part of the scheme, the Park Criminal Enterprise obtained Social Security cards beginning with the prefix “586.” Social Security cards with that prefix were issued by the United States to individuals, usually from China, employed in American territories, such as American Samoa, Guam, and Saipan. The Park Criminal Enterprise sold the cards to its customers and then escorted the customers to various states to use them to obtain identification cards and driver’s licenses.

The Park Criminal Enterprise then engaged in the fraudulent “build up” of credit scores associated with these fraudulently obtained identities. They did so by adding these identities as authorized users to the credit card accounts of various conspirators who received a fee for this service - members of the enterprise’s credit build-up teams. By attaching the identities to these existing credit card accounts, the teams increased the credit scores associated with the identities to between 700 and 800. The members of the build-up teams knew neither the real person to whom the identity belonged nor virtually any of the customers who had purchased the identities.

After building the credit scores associated with these identities, Park and his conspirators assisted, coached and directed his customers to open bank accounts and obtain credit cards. Park and his conspirators then used these accounts and credit cards to commit fraud. Park relied on several collusive merchants who possessed credit card processing machines. For a fee, known as a “kkang fee,” these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from the credit card related to these fraudulent transactions, the collusive merchants gave the money to Park and his conspirators, minus their kkang fee.

Park admitted that he operated the criminal enterprise out of several offices in Bergen County, ran advertisements in local newspapers to attract customers interested in his illegal services, met with customers and other conspirators and otherwise directed the activities of the criminal enterprise. He also admitted that he obtained and sold 586-prefix Social Security cards to his customers and members of his criminal enterprise escorted more than 100 customers to various states so they could fraudulently obtain identification cards and driver’s licenses using the Social Security cards and other fraudulent documents – such as counterfeit Chinese passports.

Park also admitted he conspired with and paid cash to various build-up teams to build the credit scores and establish credit histories for the fraudulent identities that he had sold to his customers. Park also laundered portions of the money he obtained through the fraud by wiring the money to various accounts in South Korea.

Park defrauded various credit card companies, banks, and lenders out of $4 million. He and his conspirators also claimed more than $182,000 in tax refunds from the IRS through the filing of false and fictitious tax returns and accompanying documents.       

In addition to the prison term, Judge Hayden sentenced Park to five years of supervised release and ordered to pay restitution of $4,774, 116. He will also be deported upon his release from prison.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special
Agent in Charge Aaron T. Ford in Newark; IRS Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; the Department of Homeland Security’s  
Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent in Charge Andrew M. McLees; the Federal Deposit Insurance Corporation –Office of Inspector General, under the direction of Acting Inspector General Fred W. Gibson Jr.; and the Bergen County Prosecutor’s Office and the office’s Chief of Detectives Steven Cucciniello for their work leading to today’s sentence.

The government is represented by Assistant U.S. Attorneys Jane Yoon of the U.S. Attorney’s Office Criminal Division and Anthony Moscato of the Office’s Organized Crime/Gangs Unit in Newark.

14-047                                                            

Defense counsel: Christian P. Fleming Esq., East Brunswick, N.J.

NEWARK, N.J. — A Middlesex County, N.J., woman who conspired with others to defraud the U.S. Department of the Treasury of more than $1 million in income tax refunds over a four-year period was sentenced today to 44 months in prison, U.S. Attorney Paul J. Fishman announced today.

Jahmeelah Mitchell, 30, of South Plainfield, N.J., previously pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging her with one count of conspiracy to defraud the United States.  Judge Cecchi imposed the sentence today in Newark federal court.

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

Between April 2008 and August 2011, Mitchell and others advised numerous people that they could receive tax refunds of several thousand dollars each by filing fraudulent federal tax returns.  The scheme involved reporting inflated amounts of income and taxes withheld, which resulted in artificially inflated tax refunds.

Mitchell and her conspirators instructed others to provide Mitchell with names, Social Security numbers, dates of birth, number of dependents and addresses. After obtaining this information, Mitchell electronically filed the fraudulent tax returns using internet-based software from Mitchell’s residence.  Mitchell received the tax refunds in the form of either U.S. Treasury checks or prepaid debit cards deposited into various accounts Mitchell established in the names of her conspirators. Mitchell retained a percentage of the refunds as her fee for filing the fraudulent returns.

On August 22, 2011, law enforcement agents executed a search warrant at Mitchell’s residence and recovered ledgers containing identifying information for approximately 100 individuals, as well as a stack of prepaid credit cards issued in the names of dozens of people.  Subsequent analysis of this information revealed that a total of 127 people were participants and/or victims, and Mitchell filed hundreds of fraudulent tax returns seeking $1,082,638 in refunds.

In addition to the prison term, Judge Cecchi sentenced Mitchell to three years of supervised release and ordered her to pay $1,082,638 in restitution.

U.S. Attorney Fishman credited special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; IRS B Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates, for the investigation leading today’s sentencing.

The government is represented by Assistant U.S. Attorney Adam N. Subervi of the U.S. Attorney’s Office Criminal Division in Newark.

14-046                                               

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

Mayor’s Brother Also Convicted in Connection with Extortion Plot

TRENTON, N.J. — A federal jury today found Trenton Mayor Tony F. Mack guilty on all six federal extortion, bribery and mail and wire fraud charges against him, U.S. Attorney Paul J. Fishman announced.

Mack’s brother, Ralphiel Mack, was also convicted on three of the charges, but found not guilty on three mail and wire fraud counts, following a five-week trial before U.S. District Judge Michael A. Shipp in Trenton federal court. The Macks were charged in connection with a scheme to accept $119,000 in bribes in exchange for Mayor Mack’s official actions and influence in assisting cooperating witnesses in the development of an automated parking garage on City-owned land.

“The jury’s verdict solidly affirms what we first charged more than a year ago – that Tony Mack, with the helping hands of his brother and their cohorts, sold the mayor’s office and sold out the people of Trenton,” U.S. Attorney Fishman said. “We are very grateful to the members of the jury for their service.”

Tony F. Mack, 48, and Ralphiel Mack, 41, both of Trenton, originally were charged by complaint on Sept. 10, 2012, with one count of conspiracy to obstruct commerce by extortion under color of official right related to the $119,000 extortion scheme. Also charged at that time was Joseph A. Giorgianni, 64, of Ewing, N.J. An indictment returned in December 2012 added charges against all three defendants.

Giorgianni pleaded guilty on Dec. 13, 2013, to one count of conspiring with the Macks and others to obstruct interstate commerce by extorting individuals under color of official right, in addition to a separate extortion scheme, a narcotics charge and illegal weapons possession, all charges unrelated to the Macks.

Mayor Mack was convicted of the six counts charged in the indictment:

• Conspiracy to obstruct and affect interstate commerce by extortion under color of official right;

• Attempted obstruction of commerce by extortion under the color of official right;

• Accepting and agreeing to accept bribes;

• Two counts of wire fraud;

• Mail fraud;

Ralphiel Mack was convicted on the same first three counts and found not guilty of the mail and wire fraud charges. The jury members deliberated for seven hours before returning their verdicts.

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

Mayor Mack, Giorgianni and Ralphiel Mack conspired to accept approximately $119,000 in cash and other valuables, of which $54,000 was accepted and another $65,000 that the defendants planned to accept, from two cooperating witnesses (“CW-1” and “CW-2”).  In exchange for the payments, Mayor Mack agreed to, and did, assist CW-1 and CW-2 in their efforts to acquire a City-owned lot (the “East State Street Lot”) to develop an automated parking garage (the “Parking Garage Project”).  The scheme included a plan to divert $100,000 of the purchase amount that CW-2 had indicated a willingness to pay to the City of Trenton for the lot as a bribe and kickback payment to Giorgianni and Mayor Mack. The mayor authorized and directed a Trenton official responsible for disposition of City-owned land to offer the East State Street Lot to CW-2 for $100,000, significantly less than the amount originally proposed by CW-2.

The defendants went to great lengths to conceal their corrupt activity and keep Mayor Mack “safe” from law enforcement.  For example, Giorgianni and Ralphiel Mack acted as intermediaries, or “buffers,” who accepted cash payments for Mayor Mack’s benefit.  Mayor Mack also used another City of Trenton employee involved in the scheme, Charles Hall III, 49, of Trenton, to contact other Trenton officials to facilitate the Parking Garage Project and to inform the mayor when Giorgianni had received corrupt cash payments. Hall pleaded guilty before Judge Shipp in February 2013 to an information charging him with one count of conspiracy to obstruct commerce by extortion under color of official right and one count of conspiring to distribute narcotics with others, including Giorgianni.  

To conceal the corrupt arrangement, the defendants avoided discussing matters related to the scheme over the telephone.  When those matters were discussed, they used code words and aliases.  One such code word was “Uncle Remus,” which both Giorgianni and Hall regularly used to communicate to Mayor Mack that a corrupt payment had been received.  For example, on Oct. 29, 2011, Giorgianni telephoned Hall and informed him that Giorgianni had to “see” Mayor Mack and that “I got Uncle Remus for him,” meaning a corrupt cash payment that Giorgianni had received from CW-1 two days earlier.  Giorgianni directed Hall to bring Mayor Mack to a meeting location controlled by Giorgianni (“Giorgianni’s Clubhouse”), stating “we gotta talk” because “I got something that might be good for him” and that “they’ve already come with Uncle Remus,” meaning a corrupt cash payment. On June 13, 2012, Giorgianni telephoned Mayor Mack and informed him that “Uncle Remus,” meaning a corrupt cash payment, “was there.”  Mayor Mack replied, “I’ll call you, J.  Okay?”  In text messages to Mayor Mack related to the scheme, Giorgianni would refer to himself as “Mr. Baker.”

The defendants also concealed their activities by holding meetings concerning the corrupt activity away from Trenton City Hall, including at Giorgianni’s residence, an eatery maintained by Giorgianni known as JoJo’s Steakhouse, Giorgianni’s Clubhouse and Atlantic City restaurants.  At one Atlantic City meeting among Mayor Mack, Giorgianni, Hall and CW-2, Mayor Mack instructed Giorgianni to ensure that no photographs were taken in order to conceal the corrupt arrangement.

The extortion conspiracy and attempted extortion charges are each punishable by a maximum potential penalty of 20 years in prison. The bribery charge is punishable by a maximum potential penalty of 10 years in prison.  The mail and wire fraud charges are each punishable by a maximum potential penalty of 20 years in prison. All of the counts also carry a potential fine of $250,000 or twice the gain or loss from the offense. Sentencing is scheduled for May 14, 2014

U.S. Attorney Fishman credited special agents of the FBI’s Trenton Resident Agency, Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to the charge.

The government is represented by Assistant U.S. Attorneys Eric W. Moran and Matthew J. Skahill of the U.S. Attorney’s Office Special Prosecutions Division in Trenton and Camden, respectively. 

14-045                                                         
Defense counsel: Tony Mack:  Mark G. Davis Esq., Hamilton, N.J.
Ralphiel Mack:  Robert Haney, Princeton Junction, N.J.

NEWARK, N.J. – A native of Romania who was arrested in Sweden is scheduled to make his initial court appearance today following his extradition to face charges that he directed a large-scale ATM skimming scheme targeting New Jersey bank customers, U.S. Attorney Paul J. Fishman announced.

Marius Vintila, a/k/a “Dan Girneata,” 31, is scheduled to appear before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court on a six-count criminal complaint charging him with conspiracy to commit bank fraud, aggravated identity theft, conspiracy to possess 15 or more counterfeit access devices, possession of 15 or more counterfeit access devices, conspiracy to possess access device-making equipment, and possession of access device-making equipment.  In July 2013, as federal agents arrested various members of Vintila’s large-scale ATM skimming scheme, Vintila fled the United States. On Sept. 24, 2013, he was apprehended in Sweden.  

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

Vintila was allegedly the ringleader of an extensive ATM skimming scheme that defrauded Wells Fargo, Citibank, TD Bank and multiple other financial institutions out of at least $5 million. Vintila and his conspirators installed skimmers and pinhole cameras at bank ATMs in order to steal thousands of customer bank account numbers and PIN codes. Each skimmer would read and record identity and account information contained in the magnetic strip of a customer’s ATM card. The pinhole camera secretly recorded bank customers’ keystrokes as they entered their personal identification numbers.

Vintila and another conspirator, Bogdan Radu, 30, who was charged separately and is also in custody, created and constructed the homemade skimming devices and taught others how to install them on bank ATMs. The homemade devices were installed on multiple ATMs in New Jersey, New York, Connecticut, and Florida, and were used to steal thousands of bank account numbers and personal identification numbers. After the account information was stolen, Vintila and his conspirators created false and fraudulent ATM cards, which they used to withdraw millions of dollars from customers’ bank accounts. During the course of the conspiracy, Vintila produced and transferred hundreds of fraudulent ATM cards. Vintila also used an alias, “Dan Girneata,” to open bank accounts, rent vehicles, and rent multiple self-storage units, in which he stored the contents of an entire skimming operation, including skimming devices, pinhole cameras, super glue, tape, SD cards, batteries, computers, molds, fraudulent ATM cards, and cash proceeds.

Vintila’s alleged ATM skimming operation is one of the largest ever uncovered by law enforcement. In total, to date, 12 others have been charged in connection with the skimming scheme. Many of the conspirators are Romanian nationals who lived in and around Queens, N.Y. Other charged conspirators, recruited by Vintila, included Radu, Constantin Ginga, 53; Marius Cotiga, 35; Constantin Pendus, 30; Emil Revesz, 30; Florin Apetrei, 18; Ioan Leusca, 30; Dezso Gyapias, 29; Luis Franco, 23; Mirel Hadzalic, 24; Enes Causevic, 23; and another individual charged as “FNU LNU,” (first name unknown, last name unknown) a/k/a “Chioru.”  These conspirators installed the devices designed by Vintila and Radu and used the stolen bank account information to withdraw millions of dollars from bank customers’ accounts.

With the arrest of Vintila, 12 of the 13 conspirators charged in connection with Vintila’s ATM skimming scheme to date are in custody in New Jersey and are being held without bail. Leusca and Gyapias have pleaded guilty to separate informations charging each with one count of conspiracy to commit bank fraud and one count of aggravated identity theft. They await sentencing on Feb. 20, 2014. Ginga also previously pleaded guilty to conspiring to commit bank fraud and aggravated identity theft and awaits sentencing on Feb. 26, 2014.  

Vintila is charged with six counts, as described below, which carry the following maximum penalties and fines:

Count

Offense

Maximum Penalty

Maximum Fine

Conspiracy to Commit Bank Fraud

Thirty years in prison

$1 million

2

Aggravated Identity Theft

Mandatory, consecutive penalty of two years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

3

Conspiracy to Possess Fifteen or More Counterfeit Access Devices

Five years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

4

Possession of Fifteen or More Counterfeit Access Devices

Ten years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

5

Conspiracy to Possess Access Device-Making Equipment

Seven and one-half years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

6

Possession of Access Device-Making Equipment

Fifteen years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

                       
U.S. Attorney Fishman praised special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge James Mottola, along with special agents of Immigration and Customs Enforcement, Homeland Security Investigations (HSI) in Newark, under the direction of Special Agent in Charge Andrew M. McLees, with the investigation leading to Vintila’s arrest and extradition. U.S. Attorney Fishman also thanked the U.S. Secret Service London Field Office, HSI Frankfurt, the Swedish National Bureau of Investigation, Fugitive Active Search Team, and the Police Authority of Skåne, Malmo Division, for their assistance in locating and apprehending Vintila in Sweden. The Office of International Affairs from the Justice Department’s Criminal Division provided assistance with the extradition.

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

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

14-044                                                           

Vintila Complaint

Indictment Alleges Former Mayor Defrauded Investment Client of $250,000 and Submitted Falsified Tax Returns in Order to Purchase Farm in Manalapan

TRENTON, N.J. – The former mayor of Manalapan, N.J., was arrested today on charges that he falsified his 2007 and 2008 tax returns in order to purchase a farm property in Manalapan and that he provided federal investigators and a federal grand jury with a fabricated document in 2013, U.S. Attorney Paul J. Fishman announced.

Andrew Lucas, 36, was arrested as a result of an 11-count indictment charging him with wire fraud, illegal monetary transaction, loan application fraud, false statements to the IRS, aggravated identity theft, obstruction of a grand jury investigation and falsification of records in a federal investigation. Lucas is scheduled to make his initial court appearance this afternoon before U.S. Magistrate Judge Douglas E. Arpert in Trenton federal court.

According to the indictment unsealed today:

On Dec.15, 2009, Lucas submitted a loan application to a New Jersey bank requesting $525,000 to finance his purchase of the Burke Farm property in Manalapan. Lucas provided the bank with falsified versions of his 2007 and 2008 tax returns, as well as a falsified version of a 2007 tax return for a relative whose name was also on the loan application. Lucas also falsely reported that he had a total of $210,000 in cash.  

Lucas owned and operated Lucas Capital Advisors LLC (Lucas Capital), through which he served as an investment advisor and manager to multiple individuals. To obtain the $250,000 down payment for the property, Lucas approached “Victim 1,” who was a client of Lucas Capital, to pitch an investment in an entity called VLM Investments LLC (VLM). On Feb. 15, 2010, Lucas presented a written note to Victim 1, which stated that the $250,000 investment was to be secured by “…interest in the equipment, fixtures, inventory and accounts receivable” of VLM. However, Lucas failed to inform Victim 1 that at the time the note was signed, VLM did not exist. Lucas also failed to disclose to Victim 1 that Lucas intended to make personal use of the funds. It was not until three days later, on Feb. 18, 2010, that Lucas created VLM by registering it with the State of New Jersey and the IRS, using the name and Social Security number of Lucas’s out-of-state relative, “Victim 2,” without Victim 2’s knowledge or permission.

On Feb. 22, 2010, Lucas wired $250,000 from Victim 1’s Lucas Capital investment account to a VLM bank account that had Lucas as the only authorized signer. On March 1, 2010, Lucas withdrew this money in the form of a bank check, which he provided the next day to the closing attorney for the purchase of the Burke Farm property.

Lucas also filed tax returns for VLM for tax years 2011 and 2012, both times listing Victim 2’s name and Social Security number without Victim 2’s knowledge or permission.

Federal investigators served Lucas with subpoenas on Feb. 7, 2013, for the records of VLM and Lucas Capital Advisors. In response, Lucas provided federal authorities with a fabricated and back-dated letter purporting to be from Victim 2 concerning a transaction for the purchase of the Burke Farm property.

The counts of wire fraud and falsification of records in a federal investigation are each punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. Loan application fraud is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. Illegal monetary transaction and obstruction of a grand jury investigation are each punishable by a maximum potential penalty of 10 years. Each of the charges of false statements to the IRS is punishable by a maximum potential penalty of five years in prison. Aggravated identity theft is punishable by a mandatory prison term of two years, to be run consecutive to any other sentence.

U.S. Attorney Fishman credited special agents of the FBI Red Bank Office, under the direction of Special Agent in Charge Aaron T. Ford; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and investigators with the U.S. Attorney’s Office, for the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton and Assistant U.S. Attorney Vikas Khanna of the U.S. Attorney’s Special Prosecutions Division in Newark.

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

14-043                      

Defense counsel: Mario F. Gallucci Esq., Staten Island, N.Y.

Lucas Indictment

CAMDEN, N.J. – A Cape May County, N.J. man today admitted transporting an underage girl across state lines for the purpose of engaging in sexual activity, U.S. Attorney Paul J. Fishman announced.

Michael Kulick, 46, of Dennis Township, N.J., pleaded guilty before U.S. District Court Judge Joseph E. Irenas to an information charging him with one count of transportation of a minor over state lines in order to engage in sexual activity.

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

In August 2012, Kulick and his family went on a vacation to Lancaster, Pa., accompanied by his daughter’s friend, a 15-year-old girl. Kulick engaged in sexual contact with the minor girl while staying at a hotel in Pennsylvania. Kulick admitted that after returning to New Jersey, he continued to have a sexual relationship with the minor girl for approximately two months.  Kulick also admitted that at the time that he transported the minor girl to and from Pennsylvania, he knew that it was illegal in both New Jersey and Pennsylvania to commit statutory rape.

The count to which Kulick pleaded guilty is punishable by a maximum potential penalty of 10 years in prison, a $250,000 fine and restitution for the victim. He will also be required to serve at least five years of supervised release. Sentencing is scheduled for May 13, 2014.

U.S. Attorney Fishman credited special agents of the FBI Atlantic City resident agency, under the direction of Special Agent In Charge Aaron T. Ford; in Newark; the N.J. State Police, under the direction of Col. Rick Fuentes, superintendent of the state police, and investigators with the Cape May County Prosecutor’s office, under the direction of Prosecutor Robert L. Taylor, with the investigation leading to today’s guilty plea.

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

14-042                                  

Defense counsel:  Edwin J. Jacobs Jr. Esq., of  Atlantic City, N.J.

Kulick Information

CAMDEN, N.J. – An Alabama man admitted today to conspiring to defraud financial institutions and launder stolen funds as part of a $15 million mortgage fraud scam that used phony documents and “straw buyers” to make illegal profits on overbuilt condos, U.S. Attorney Paul J. Fishman announced.

Kinard Henson, 41, of Ventress, Ala., also admitted to the attempted murder of a straw buyer who was a witness to the mortgage fraud scheme.

Henson pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to a second superseding indictment charging him with one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, and one count of attempted murder of a witness in a federal case.

According to the documents filed in this case and statements made in court: Henson was among 11 defendants charged in July 2012 with conspiracy to commit wire fraud and conspiracy to commit money laundering. Two additional defendants, Nicholas Tarsia, 65, of Totowa, N.J., and Mashon Onque, 43, of East Orange, N.J., were charged in November 2013 with conspiracy to commit wire fraud.  Tarsia was also charged with one count of conspiracy to commit money laundering.
Henson’s conspirators, including Timothy Ricks, 46, of East Orange, N.J., who pleaded guilty before Judge Simandle on Feb. 27, 2013, located oceanfront condominiums overbuilt by financially distressed developers and negotiated a buyout price with the sellers. They then caused the sales prices for the properties – located in Wildwood Crest and North Wildwood, N.J., other locations in New Jersey and in Naples, Fla. – to be much higher than the buyout price to ensure large proceeds. Other defendants helped conceal the true sales prices of certain properties through inflated sales contracts and sale and finder’s fee agreements.

Henson recruited one of the straw buyers to purchase certain properties at the inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The conspirators created false documents, such as fake W-2 forms, pay stubs, bank statements and investment statements, to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.

Henson and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Henson received a portion of the proceeds from his conspirators, after his conspirators had funds wired or checks deposited into various accounts they controlled. Henson’s conspirators also distributed a portion of the proceeds to other members of the conspiracy for their respective roles.

Henson learned of a subpoena seeking documents in connection with a straw buyer’s purchases of real estate properties shortly after it was served by federal law enforcement agents on a mortgage brokerage firm. Henson, who had recruited the straw buyer, contacted another individual to kill the straw buyer. They then lured the straw buyer to a wooded area in Mobile, Ala. At Henson’s direction and using Henson’s firearm, the other individual shot the straw buyer multiple times.

The wire fraud conspiracy charge is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The money laundering conspiracy charge is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine. The attempted murder of a witness charge carries a maximum potential penalty of 30 years in prison and a $250,000 fine. Henson’s is scheduled to be sentenced July 11, 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 Shantelle P. Kitchen in Newark, for their roles in the ongoing investigation.

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

14-041                                                      

Defense counsel: Stanley King Esq., Woodbury, N.J.

Henson, Kinard Second Superseding Indictment

NEWARK, N.J. – A doctor practicing in Newark was convicted at trial of receiving cash kickbacks for diagnostic testing referrals, becoming the 14th doctor and 16th defendant to be convicted in connection with the government’s investigation of illegal payments made by an Orange, N.J., diagnostic testing facility, U.S. Attorney Paul J. Fishman announced today.

Maryam Jafari, 43, was convicted of all three counts of a superseding indictment charging her with conspiracy and two counts of violating the federal health care anti-kickback statute after a three-week trial before U.S. District Judge Claire C. Cecchi in Newark federal court. The jury returned the guilty verdicts late Tuesday afternoon (Feb. 4, 2014) after two hours of deliberations.

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

Jafari was a doctor licensed in New Jersey to practice internal medicine and operated an office in Newark. From 2010 through December 2011, Jafari solicited and received cash kickbacks from Orange Community MRI LLC (Orange MRI) in exchange for MRIs and CAT scans she referred to the diagnostic testing facility.

At the end of each month, OCM printed patient reports that included information such as dates of service, patient name, referring health care practitioner and medical insurance to be billed. The reports were used to tally the number of tests referred by each doctor and determine the amount of kickback payment paid to the referring healthcare provider.

On Nov. 22, 2011, Jafari met with a cooperating witness at Jafari’s office and accepted a white envelope containing $1,965 in cash, payments for three months of tests Jafari referred to Orange MRI. On Dec. 6, she accepted another payment of $420 in cash for referrals from October 2011. A trial on these charges in 2012 ended in a mistrial when the jury could not reach a unanimous verdict.    

The charges of which Jafari was convicted are each punishable by a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. Sentencing will be scheduled at a later date.

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, who investigated the case with criminal investigators from the U.S. Attorney’s Office.

The government is represented by Assistant U.S. Attorneys Scott B. McBride and Deputy Chief Joseph G. Mack of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit in Newark.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $500 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.

14-040                               

Defense counsel: Maria Noto Esq., Matawan, N.J. 

Jafari, Maryam Superseding Indictment

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

Klary Arcentales, 45, of Lyndhurst, N.J., pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an indictment charging her with one count of conspiracy to commit bank fraud and four counts of bank fraud.

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

Between 2007 and 2012, Arcentales engaged in a mortgage fraud conspiracy through a company called Premier Mortgage Services (Premier), where she worked as a loan officer. Arcentales provided false and fraudulent documents to financial institutions in connection with mortgage loan applications on behalf of “straw buyers” to induce those financial institutions to fund mortgage loans. Arcentales then profited illegally by receiving a commission from Premier for each mortgage loan that she closed and by diverting portions of the fraudulently obtained mortgage proceeds to herself.

Two other conspirators, Lester Soto, 57, of Freehold, N.J., and Linda Cohen, 56, of Orange, N.J., previously pleaded guilty in connection with their roles in the mortgage fraud scheme. Soto acted as a loan officer on certain Premier mortgage loan applications and took a percentage of Premier’s profits. Soto employed document makers to create false and fraudulent documents in furtherance of the scheme and put loan officers at Premier, including Arcentales, in contact with these document makers to create other false and fraudulent documents. Soto is scheduled to be sentenced on Feb. 10, 2014.

Cohen was a paralegal who served as the settlement agent on mortgage loans brokered by Arcentales for various properties. Cohen convened closings, received funds from lenders, and prepared “HUD-1” reports that claimed to reflect the sources and destinations of funds for mortgages on subject properties. However, the HUD-1s were neither true nor accurate. Cohen is scheduled to be sentenced Feb. 18, 2014.

Arcentales faces a maximum potential penalty of 30 years in prison and a fine of $1 million, or twice the gross gain or loss caused by her offense. Sentencing is currently scheduled for May 19, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea. Fishman also thanked the Social Security Administration-Office of Inspector General, under the direction of Special Agent in Charge Edward Ryan, for its participation in the investigation.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Zach Intrater of the Criminal Division 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

14-039                                                     

Defense counsel: Michael Orozco Esq., Newark

Arcentales, Klary Indictment

NEWARK, N.J. – A Russian national living in New York was sentenced today to 30 months in prison for conspiring with others to hack into retail brokerage accounts and execute sham trades, New Jersey U.S. Attorney Paul J. Fishman announced.

Petr Murmylyuk, 33, of Brooklyn, N.Y., previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with conspiracy to commit securities fraud. Judge Salas imposed the sentence today in Newark federal court.

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

Murmylyuk admitted that he participated in a conspiracy to steal from online trading accounts at Scottrade, E*Trade, Fidelity, Schwab and other brokerage firms. Members of the conspiracy first gained unauthorized access to the online accounts of brokerage firm customers.  The conspirators then used stolen identities to open additional accounts – referred to in the Information as “Profit Accounts” – at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the Profit Accounts, leading to losses in the victims’ accounts and gains in the Profit Accounts. One version of the fraud involved causing the victims’ accounts to sell options contracts to the Profit Accounts, then to purchase the same contracts back minutes later for many times the price. 

The members of the conspiracy recruited foreign nationals visiting, studying, and living in the United States to open bank accounts into which illegal proceeds could be deposited. The conspirators then caused the proceeds of the sham trades to be transferred from the Profit Accounts into those accounts, where the stolen money could be withdrawn. The scheme caused combined losses to Scottrade, E*Trade, Fidelity, Schwab and other affected brokerage firms of approximately $1 million.

In addition to the prison term, Judge Salas sentenced Murmylyuk to serve three years of supervised release and ordered him to pay $505,357.79 in restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew McLees; and IRS – Criminal Investigations, New York Field Office, under the direction of Special Agent in Charge Toni M. Weirauch, with the investigation leading to today’s sentencing.  He also thanked the U.S. Securities and Exchange Commission’s Philadelphia Regional Office, under the leadership of its Regional Director Daniel M. Hawke, and the Justice Department’s Computer Crime and Intellectual Property Section for their assistance in the investigation, as well as the Manhattan District Attorney’s Office, under the direction of District Attorney Cyrus R. Vance Jr., for its contributions and cooperation in coordinating parallel investigations.

The government is represented by Assistant U.S. Attorney Christopher J. Kelly, Chief of the Economic Crimes Unit in Newark.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information about the task force visit: www.stopfraud.gov.

14-037                                                               

Defense counsel:  Bradley L. Henry Esq., New York

NEWARK, N.J. – A federal grand jury returned a superseding indictment today against four Brooklyn, N.Y., men in connection with a spree of eight armed robberies of electronic stores in New Jersey and New York, U.S. Attorney Paul J. Fishman announced.

Today’s indictment adds multiple defendants and counts to the original indictment returned on May 22, 2013. Carl Williams, 30, Eric Williams, 33, (no relation) Kajuan Crawley, 26, and Unique Randolph, 27, are charged with one count of conspiracy to commit Hobbs Act robbery in connection with eight armed robberies of electronic stores that took place between May 30, 2012, and Jan. 16, 2013, including robberies in Linden, Paramus, and Woodbridge, N.J.

In addition, Carl Williams and Eric Williams, both arrested on Feb. 14, 2013, are each charged with two counts of Hobbs Act robbery and two counts of using a firearm in furtherance of a crime of violence. Randolph, arrested July 24, 2013, and Crawley, arrested Oct. 2, 2013, are also each charged with one count of Hobbs Act robbery and one count of using a firearm in furtherance of a crime of violence. All defendants have been detained since their arrest.

All defendants are scheduled to appear before U.S. District Judge Joel A. Pisano in Trenton federal court for an arraignment at a date yet to be determined.

According to the indictment and other documents filed in this case:

Crawley, Randolph, Carl Williams, and Eric Williams conspired to commit eight armed robberies of electronic stores as follows:

Date

Store

Location

Radio Shack

New Rochelle, N.Y.

June 11, 2012

T-Mobile

Hempstead, N.Y.

June 18, 2012

Radio Shack

Westbury, N.Y.

June 20, 2012

T-Mobile

West Hempstead, N.Y.

June 21, 2012

Radio Shack

Rockville Center, N.Y.

Sept. 20, 2012

T-Mobile

Linden, N.J.

Oct. 2, 2012

T-Mobile

Woodbridge, N.J.

Jan. 16, 2013

T-Mobile

Paramus, N.J.

The men used a similar routine for each of the robberies. One or two men would serve as lookouts while two or more men would enter the store, brandish a firearm, and tie-up the store employees at gunpoint. After tying up the employees, the men would steal cell phones and other electronic equipment and then flee in getaway cars.

The charges of conspiracy to commit a Hobbs Act robbery are punishable by a maximum potential penalty of 20 years in prison. The first count of using a firearm in furtherance of a crime of violence carries a mandatory minimum penalty of seven years and a maximum of life in prison. Any additional count carries a mandatory minimum prison term of 25 years and a maximum of life in prison. Each charge also carries a maximum fine of $250,000.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to the arrest and charges. He also thanked the Linden, Paramus, and Woodbridge police departments in New Jersey, as well as the New York City and Nassau County police departments and the Kings County District Attorney’s Office in New York for their work in this case.

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

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

14-038                                   

Defense counsel: Carl Williams: Mark A. Berman Esq., River Edge, N.J.
Kajuan Crawley: Maria D. Noto Esq., Matawan, N.J.
Eric Williams: Aaron M. Goldsmith Esq., New York
Unique Randolph: Damian P. Conforti Esq., Newark

Williams, Carl et al., Superseding Indictment

TRENTON, N.J. – A federal grand jury in Trenton returned a superseding indictment today charging four men from New York and Pennsylvania with various offenses related to the trafficking of a minor and forcing her into prostitution for their own profit, New Jersey U.S. Attorney Paul J. Fishman announced.

The indictment charges Varian Charles, 29, aka “Bob,” of Philadelphia; Wilbur Senat, 24, aka “Wilby,” of Haverstraw, N.Y.; Samuel Verrier, 35, aka “Dre,” of Philadelphia; and Karl Venord, 31, aka “Imme,” of Philadelphia. All four were previously charged by complaint with related offenses in July 2013 and have been detained since that time. Charles was subsequently indicted. Today’s superseding indictment adds additional charges. All four defendants will be arraigned on a date to be determined.

According to the documents filed in this case:

The minor victim met Senat in the summer of 2011 in upstate New York. Shortly after they met, Senat took her to a motel in Nyack, N.Y., where he forced her to engage in commercial sex acts with various individuals for which they paid Senat. Senat threatened the victim’s family if she did not leave New York with him, so she agreed, and Senat purchased tickets for himself and the minor victim to take public transportation from New York to Philadelphia.

Charles met Senat and the victim in Philadelphia, where the men told the girl she would be staying at Charles’ house to engage in prostitution. While there, the victim was forced to have sex with various individuals who paid Senat and Charles. Senat and Charles also physically abused her.

Verrier met the victim while she was at Charles’ house, and took her. He then brought her to various clubs in Philadelphia, where he instructed her to solicit club patrons for sex acts in exchange for money.

In late August 2011, Verrier introduced the victim to Venord and the pair took her to New Jersey. During the drive, the men told her they intended to blackmail an individual in New Jersey, instructing her to have sex with this individual and take photographs of him. After locating the individual outside a bank in Bordentown, N.J., they were unsuccessful in their attempt.

The charges and maximum penalties are as follows:

Count

Defendant(s) Charged

Maximum Potential Penalty

Charles
Senat

Life in prison; $250,000 fine

2 – sex trafficking of children

Senat

Life in prison (10 year minimum/15 year minimum if by force); $250,000 fine

3 – conspiracy to transport minors to engage in prostitution

Charles
Senat

Life in prison (minimum 10 years); $250,000 fine

4 – transportation of a minor to engage in prostitution

Senat

Life in prison (minimum 10 years); $250,000 fine

5 – conspiracy to transport a minor to engage in criminal sexual activity

Verrier
Venord

Life in prison (minimum 10 years); $250,000 fine

6 – transportation of a minor to engage in criminal sexual activity

Verrier
Venord

Life in prison (minimum 10 years); $250,000 fine

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation. The New Jersey Division of Criminal Justice also provided assistance.

The government is represented by Assistant U.S. Attorneys Sarah Wolfe in Trenton and Courtney M. Oliva in Newark.

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

Charles, Varian Superseding Indictment

NEWARK, N.J. – A Morris County, N.J. man has been found guilty of robbing a bank at gunpoint, U.S. Attorney Paul J. Fishman announced today.

Rahman Fulton, 35, of Randolph, N.J., was convicted by a jury Jan. 28, 2014, after a two-week trial before U.S. District Judge Stanley R. Chesler in Newark federal court. The jury deliberated three hours before returning guilty verdicts on one count of bank robbery and one count of using a firearm in furtherance of the bank robbery.

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

Fulton was charged with robbing the PNC bank in Randolph May 25, 2012. Fulton entered the bank wearing a black cloth mask covering his head and face and holding a handgun. He demanded and received money from a bank teller. The bank teller slipped a GPS tracking device into the money she handed over to Fulton. The GPS data placed the tracking device in Fulton’s bedroom minutes after the robbery. He later lied to the police about his whereabouts during the robbery and made other incriminating statements to his girlfriend and girlfriend’s sister, including a call just 10 minutes after the robbery to someone that worked across the street from the bank asking them if they had heard about the robbery.

Fulton faces a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, on the bank robbery conviction and a mandatory consecutive seven years in prison on the weapons conviction. Sentencing is scheduled for May 13, 2014.

U.S. Attorney Paul J. Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to the charge. He also thanked the Randolph Township Police Department and Morris County Prosecutor’s Office for their contributions to the case.

The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Elizabeth Harris of the U.S. Attorney's Office General Crimes Unit in Newark.

14-033                                                      

Defense Counsel: Carol Gillen Esq. and K. Anthony Thomas Esq., Assistant Federal Public Defenders, Newark                        

NEWARK, N.J.— A Hudson County, N.J., man was sentenced today to 97 months in prison for sexually abusing a sleeping woman aboard a flight from Phoenix to Newark Liberty International Airport in August 2012, U.S. Attorney Paul J. Fishman announced. 

Bawer Aksal, 49, of North Bergen, N.J., was previously convicted of one count of sexual abuse and one count of abusive sexual contact following a five-day trial before U.S. District Judge Jose L. Linares. Judge Linares imposed the sentence today in Newark federal court.

According to documents filed in this case and the evidence presented at trial: Aksal was a passenger on a United Airlines flight from Phoenix to Newark on Aug. 20, 2012, sitting in the middle seat in a row of three. Neither Aksal, the victim seated by the window nor the passenger in the aisle seat knew one other. Before the plane took off, the victim texted a friend complaining about Aksal’s arm encroaching into her seating area.

About one hour before landing, the aisle passenger looked to his right and saw Aksal with his body against the victim’s, his arms around her back and beneath a sweater draped over her. The victim awoke to find Aksal’s hands inside her shirt and shorts and struggled out of his grasp. The aisle passenger observed her jolting awake and he and the victim both gathered their belongings and headed to the back of the plane to report what happened to the flight attendants. 

Aksal was detained upon arrival in Newark and arrested by FBI agents.

In addition to the prison term, Judge Linares sentenced Aksal to serve three years of supervised release and ordered him to pay restitution to the victim for her medical expenses. Aksal is required to register as a sex offender.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and the Port Authority Police Department, under the direction of Superintendent Michael A. Fedorko, with the investigation.

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

The federal government has exclusive jurisdiction over all sexual abuse cases that occur in American airplanes, as such events are outside the jurisdiction of any state.

14-035                                           

Defense counsel: Robert Degroot Esq., Newark                                                                                                                   

CAMDEN, N.J. – A Camden County, N.J., man was sentenced today to 84 months in prison for illegally possessing firearms, including assault rifles and a stolen handgun, which he sold to a confidential informant, U.S. Attorney Paul J. Fishman announced.

Ashley C. Love, 39, of Lindenwold, N.J., previously pleaded guilty before U.S. District Judge Renée Marie Bumb in Camden federal court to an information charging him with one count of possessing firearms and ammunition while being a previously convicted felon.

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

Between October 2011 and November 2011, Love sold a confidential informant five firearms – three assault rifles (one of them, with compatible ammunition), a stolen 9mm Ruger handgun (with compatible ammunition), and a shotgun. All of the weapons and ammunition are now in the custody of law enforcement.

In addition to the prison term, Judge Bumb sentenced Love to serve three years of supervised release.

U.S. Attorney Fishman credited special agents of the ATF, under the direction of Acting Special Agent in Charge George Belsky, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Justin C. Danilewitz of the U.S. Attorney’s Office in Camden.

14-034                                       

Defense counsel: Lisa Lewis Esq., Philadelphia                                                                                                                    

TRENTON, N.J. – A partner in Source Institute for Human Performance, a Princeton, N.J., provider of exercise coaching services to independent high schools, pleaded guilty today to defrauding insurance companies by falsely claiming that Source gave clients physical therapy, U.S. Attorney Paul J. Fishman announced.

David Nogaki, 42, of North Brunswick, N.J., pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with one count of conspiracy to commit health care fraud.

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

Nogaki was a partner in Source Institute for Human Performance, which provided exercise, strength, conditioning and performance coaching services to students, faculty and staff at certain independent high schools in New Jersey. Nogaki and his conspirators at Source developed a scheme to enrich themselves by billing their personal training sessions as physical therapy services covered by health insurance – even though no one at Source was a physical therapist.

Nogaki and his conspirators would ask clients for their health insurance information and then lie to the insurance companies, indicating Source provided physical therapy. Some clients came to Source with a doctor’s prescription for physical therapy, and Source would treat those individuals under the prescription and then bill insurers. For other clients who had never seen a doctor, Nogaki made up his own diagnosis and then billed insurers as if he had provided physical therapy.

Nogaki admitted submitting claims to AmeriHealth, Aetna, Horizon Blue Cross Blue Shield of New Jersey and United Healthcare. Source received over $200,000 in fraudulent insurance payments from the scheme.

Nogaki faces a maximum potential penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss caused by his offense. Sentencing is currently scheduled for May 5, 2014.

U.S. Attorney Fishman credited agents of the FBI’s Trenton Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation.

The government is represented by Assistant U.S. Attorney R. David Walk Jr. of the U.S. Attorney’s Office Health Care and Government Fraud Unit.

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Defense counsel: Roberto Cuan Esq., Teaneck, N.J.                                                                                                    

Nogaki Information

NEWARK, N.J. – The owner of a tax preparation business admitted today his role in the preparation of income tax returns with false information, Assistant Attorney General for the Tax Division Kathryn Keneally and U.S. Attorney Paul Fishman announced.

Carlyle Fraser of Maplewood, N.J., owner of Fraser CPA and Taxko Inc., a tax preparation business, pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to an information charging him with one count of aiding and assisting in the preparation of false individual income tax returns.

According to documents filed in this case and statements made in court: From 2008 through 2011, Fraser prepared and filed false individual income tax returns for his clients. On April 8, 2011, Fraser prepared a false 2010 individual income tax return for an undercover agent, which claimed false deductions for medical and dental expenses, charitable contributions, unreimbursed employee expenses, tuition, a business loss, and a capital gains loss. In preparing false individual income tax returns for his clients, Fraser caused a tax loss to the IRS of $149,739.
 
Assistant Attorney General Keneally and U.S. Attorney Fishman credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea.

The count to which Fraser pleaded guilty is punishable by a maximum potential penalty of three years in prison and a fine of $250,000. Sentencing is scheduled for June 25, 2014.
 
The government is represented by Tax Division Trial Attorneys Jessica Moran and Tino Lisella.
 
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

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Defense counsel: Thomas A. Ashley Esq., Newark

Fraser, Carlyle Information

NEWARK, N.J. – A former Hackensack, N.J., dealer in ancient coins today admitted filing a false federal income tax return for the 2006 tax year, U.S. Attorney Paul J. Fishman announced. 
           
Gantcho Zagorski, 60, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court to one count of aiding and assisting in the filing of a false tax return.

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

Zagorski owned and operated a business that sold ancient coins to domestic and international customers, primarily on the online auction site eBay, from his residence in Hackensack, N.J. Zagorski; his wife; and, at times, his daughter, operated the coin-selling business under the names “Diana Coins,” “Paganecoins,” and “Diana Coins LLC.”

Zagorski admitted he provided histax preparer with false and fraudulent information by substantially understating the amount of gross receipts and sales earned by his business and then caused to be filed with the IRS a false federal income tax return for 2006. Zagorski admitted the 2006 tax return claimed gross receipts and sales of $310,901 when, in fact, the business had generated more than $600,000 in gross receipts and sales for that year.

The tax count to which Zagorski pleaded guilty carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is scheduled for May 12, 2014.

U.S. Attorney Fishman credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, Newark Field Office; Department of Homeland Security, Homeland Security Investigations, New York, under the direction of Special Agent in Charge James T. Hayes Jr.; and the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Maureen Nakly and Leslie Schwartz of the U.S. Attorney’s Office in Newark.

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

Zagorski, Gantcho Indictment

CAMDEN, N.J. – A Camden man was sentenced today to 100 months in prison for his role in a scheme in which he and others stole business checks from the mail in New Jersey and Connecticut, altered them and cashed them through a series of conspirators, U.S. Attorney Paul J. Fishman announced.

Michael A. Ingalls, Jr., 36, previously pleaded guilty before Chief U.S. District Judge Jerome B. Simandle to an information charging him with one count of conspiracy to commit bank fraud and one count of possession of stolen mail. Judge Simandle imposed the sentence today in Camden federal court.

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

From September 2010 through January 2012, Ingalls and others stole mail containing checks from businesses in Burlington, Camden and Gloucester counties in New Jersey. Ingalls and his conspirators – including Ibn Muhammad, 35, of Camden – would recruit conspirators to cash the stolen checks, altering the name of the payee on the check to match the name of the recruit. Ingalls, Muhammad and the check casher would then travel to a bank to cash the check. 

Ingalls, Muhammad and their conspirators cashed or attempted to cash more than 100 stolen and altered business checks worth more than $600,000. The scheme resulted in a total loss of more than $300,000 to the victim banks. 

In addition to the prison term, Judge Simandle sentenced Ingalls to serve five years of supervised release and ordered him to pay $361,955.04 in restitution.

Muhammad pleaded guilty to bank fraud and theft of mail and was sentenced to 135 months in prison on July 15, 2013. One of Ingalls’ and Muhammad’s conspirators, Andrew Fortune, 62, of Camden, pleaded guilty to conspiracy to commit bank fraud and was sentenced to 21 months in prison on Dec. 11, 2013.

U.S. Attorney Fishman credited special agents from the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates in Newark, and troopers from the New Jersey State Police, under the direction of Col. Rick Fuentes, with the investigation.

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

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Defense counsel: Dennis Wixted Esq., Camden

TRENTON, N.J. – The former regional director of the Eastern Region of Pop Warner Little Scholars Inc. (Pop Warner) today admitted stealing hundreds of thousands of dollars from the organization and using the funds for his personal benefit, U.S. Attorney Paul J. Fishman announced.     

David Marshall, of Jackson, N.J., pleaded guilty today before U.S. District Judge Joel A. Pisano in Trenton federal court to an information charging him with one count of wire fraud.

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

Between 2005 and 2011, Marshall performed work for Pop Warner on a voluntary basis and held various positions.  From 2006 through 2011, Marshall was the regional director for the Eastern Region of Pop Warner. He was responsible for handling the finances of the Eastern Region and had access to its bank and credit card accounts. Marshall used his authority to steal hundreds of thousands of dollars from Pop Warner. He improperly used funds from Pop Warner bank accounts to pay off personal debts and make cash withdrawals. Marshall also used a Pop Warner credit card to purchase personal items and other things unrelated to Pop Warner.

The wire fraud count to which Marshall pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. As part of the plea, Marshall agreed to pay restitution to the victim of the offense in an amount that will be determined at sentencing, which is scheduled for June 25, 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 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:  Brian P. Reilly Esq., Assistant Federal Public Defender, Trenton

Marshall Information

NEWARK, N.J. – The former pharmarcist-in-charge of West Orange Pharmacy today admitted to illegally distributing hundreds of tablets of oxycontin in exchange for thousands of dollars in cash, U.S. Attorney Paul J. Fishman announced.

Leonard “Lenny” Stefanelli, 49, of East Hanover, N.J., pleaded guilty before U.S. Magistrate Judge Michael A. Hammer to an information charging him with illegally dispensing oxycodone. Stefanelli also admitted to conspiring with brothers Robert Carlucci and William Carlucci, both 70, both of Florham Park, N.J., to submit fraudulent bills to health care benefit providers, including Medicare and Medicaid.

Stefanelli agreed forfeit $1.5 million, consisting of illegal profits obtained from his illegal sales of oxycodone and his submission of fraudulent bills to health care benefit providers.

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

Oxycodone, the active ingredient in brand name pills such as Oxycontin, is a Schedule II controlled substance B meaning that it has a high potential for abuse, a currently accepted medical use with severe restrictions, and abuse of the drug may lead to severe psychological or physical dependence. A pharmacist can only dispense a Schedule II controlled substance when presented with a written prescription from a doctor.

From February 1, 2012, to August 6, 2012, on at least six separate occasions, Stefanelli sold hundreds of tablets of Oxycontin to an individual, without a prescription, in exchange for cash. Each sale took place inside West Orange Pharmacy. For example, on Feb. 8, 2012, Stefanelli sold one bottle of 100-count Oxycontin 30-mg tablets and one bottle of 100-count Oxycontin 15-mg tablets for $1,800.

Between 1992 and October 2012, Stefanelli conspired with Robert Carlucci and William Carlucci to submit fraudulent bills to health care benefit providers, including Medicaid and Medicare, reaping at least $921,634 from his scheme. Robert Carlucci and William Carlucci previously pleaded guilty to committing health care fraud by participating in a variety of schemes designed to cheat customers and bilk insurance companies out of millions of dollars.  They are both scheduled to be sentenced on Feb. 27, 2014.

The narcotics distribution charge to which Stefanelli pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a fine of up to $1,000,000. Sentencing is scheduled for April 30, 2014, before U.S. District Judge Faith S. Hochberg.

U.S. Attorney Fishman credited special agents of the DEA, under the direction of Special Agent in Charge Carl Kotowski; and special agents of the Food & Drug Administration’s Office of Criminal Investigations, under the direction of Mark Dragonetti, with the investigation leading to today’s guilty plea. He also thanked the Elizabeth, Clinton, Toms River, West Orange, and Marlboro police departments, along with the Essex County Sheriff’s Department, for their work on this case.  

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

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Defense counsel: Carlos Ortiz Esq., Morristown, N.J.

Stefanelli Information

NEWARK, N.J. — A federal jury returned guilty verdicts late Thursday, Jan. 23, 2014, against a former contract employee for U.S. Citizenship and Immigration Services (USCIS) for stealing hundreds of immigration forms from the warehouse where he worked and selling them for ultimate use as part of a criminal enterprise, U.S. Attorney Paul J. Fishman announced.

Martin Trejo, 47, of Rialto, Calif., was convicted of one count of conspiracy to steal government property and transport it in interstate commerce and one count of transportation of stolen goods in interstate commerce. The jury returned the verdict after less than two hours of deliberation following a one-week trial before U.S. District Judge Faith S. Hochberg in Newark federal court.

According to documents filed in this case and the evidence at trial: While working as a contract employee for USCIS, Trejo stole hundreds of immigration forms from the warehouse where he worked and sold them to a conspirator. The conspirator then sold the forms to a criminal enterprise that used them to obtain hundreds of driver’s licenses for individuals in the country illegally and living in New Jersey and other states.

The investigation into the wider scheme has resulted in 13 convictions, with prosecutions ongoing.

The conspiracy count carries a maximum potential penalty of five years in prison; the transportation count carries a maximum potential penalty of 10 years in prison. Each count also carries a maximum $250,000 fine. Trejo is scheduled to be sentenced on April 29, 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 agents of the Department of Homeland Security, Office of Inspector General, under the direction of Acting Special Agent in Charge Edward Nasiatka of the New York field office, with the investigation.

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

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Defense counsel: John P McGovern Esq., Newark

NEWARK, N.J. - A Florida man is expected in court today after federal agents arrested him on Jan. 18, 2014, in LaBelle, Fla., on New Jersey federal charges alleging he sold the potentially deadly toxin abrin through an underground, Internet-based marketplace, New Jersey U.S. Attorney Paul J. Fishman announced.

Jesse William Korff, 19, of LaBelle, was arrested as a result of an investigation by U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI) and the FBI. The criminal complaint charges Korff with one count of possession and transfer of a toxin for use as a weapon and one count of smuggling goods from the United States. Korff, who had posted a listing for the sale of the toxin on a website known as “Black Market Reloaded” (BMR), was unaware the customer who responded was an undercover HSI agent.

The defendant is scheduled for an initial appearance and bail hearing this afternoon before U.S. Magistrate Judge Douglas N. Frazier in Fort Myers, Fla.,federal court. He will be brought to New Jersey to appear in Newark federal court on a date to be determined.

“The criminal complaint alleges Jesse Korff was willing to sell a potentially deadly toxin to a stranger over the Internet,” said U.S. Attorney Fishman. “He allegedly peddled the poison on a virtual black market of illegal and dangerous goods, hidden in the shadow of a secretive computer network favored by cybercriminals. Had this been an actual sale to a real customer, the consequences could have been tragic. Fortunately, an undercover law enforcement officer posing as a buyer was able to get a dangerous chemical weapon and its alleged seller off our streets.”

“HSI has worked tirelessly with the FBI and other law enforcement partners to combat underground websites such as BMR,” said Andrew McLees, Special Agent in Charge of HSI Newark. “Anyone who can sell abrin, a potential agent for chemical terrorism, must be stopped. The arrest of Korff shows HSI’s commitment to protecting the public from individuals who show a callous disregard for their safety in the interest of making a buck.”

According to the criminal complaint: Beginning in April 2013, HSI special agents conducted an investigation of illicit sales activity on BMR. The website provides a platform for vendors and buyers to conduct anonymous online transactions involving the sale of a variety of illegal goods, including biological agents, toxins, firearms, ammunition, explosives, narcotics and counterfeit items. Unlike mainstream e-commerce websites, BMR is only accessible via the Tor network – a special computer network designed to enable users to conceal their identities and locations. Transactions on BMR are conducted using Bitcoin, a decentralized form of electronic currency that only exists online.

Korff maintained a seller’s profile on BMR, through which he negotiated the sale of two liquid doses of abrin to the undercover agent. During their online conversations, Korff told the buyer about his delivery methods – concealing vials in a carved-out and re-melted candle – and discussed how much abrin was needed to kill a person of a particular weight and how best to administer the toxin. Korff also assured the buyer that a victim’s death would appear to be a bad case of the flu.

Korff and the buyer agreed on a total purchase price of $2,500 for two doses of the poison. The undercover transferred a deposit – the equivalent of $1,500 in Bitcoin – from a bank account in New Jersey to Korff on Jan. 6, 2014. The pair agreed that the buyer would travel from Canada on Jan. 15, 2014, to retrieve the abrin from a prearranged location. Korff sent the agent pictures of a specific spot at a rest stop approximately 10 miles outside Fort Myers where he planned to leave the package.

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

The candles were found to contain vials of liquid containing a detectable amount of abrin. Even small doses of abrin are potentially lethal to humans if ingested, inhaled or injected – causing death within 36 to 72 hours from the time of exposure.

U.S. Attorney Fishman credited special agents of HSI, under the direction of Special Agent in Charge McLees in Newark, and FBI Special Agent in Charge Paul Wysopal, Tampa Division, with leading the ongoing investigation. He also thanked special agents of the FBI in Newark, under the direction of Special Agent in Charge Aaron T. Ford, and HSI in Ft. Myers, under the direction of Special Agent in Charge Susan McCormick, for their work. The U.S. Attorney also recognized the FBI’s Joint Terrorism Task Force, including and along with the U.S. Postal Inspection Service and the Glades County, Hendry County and Lee County Sheriff’s Offices for their assistance. Vital support was provided by the Justice Department’s National Security Division Counterterrorism Section in Washington and the U.S. Attorney’s Office for the Middle District of Florida.

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

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

14-024                                                            

Korff, Jesse William Complaint

Companies Failed to Report Millions In Cash From Customers

NEWARK, N.J. – Shake-N-Go Fashion Inc., and Model Model Hair Fashion Inc. – wholesale hair product companies based in Port Washington, N.Y. – entered into an agreement today to resolve claims brought by the New Jersey U.S. Attorney’s Office that they enabled the structuring of cash transactions to avoid reporting requirements in violation of the Bank Secrecy Act (BSA), announced U.S. Attorney Paul J. Fishman.
 
After an investigation conducted by the U.S. Attorney’s Office and U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), the companies – referred to together in court documents as “SNG” – have agreed to forfeit $15 million and to enact a number of compliance reforms as part of the settlement. The settlement agreement and forfeiture complaint were filed today in Newark federal court.

“It doesn’t matter what your business is; you are required to follow the financial reporting requirements of the United States,” said U.S. Attorney Fishman. “Shake-N-Go learned that the hard way, forfeiting millions and enacting stringent compliance reforms as a result of the government’s investigation. Criminals structure cash transactions to hide all manner of illegal activity, and businesses must be vigilant to be sure they are not providing the haven for doing so.”
 
According to documents filed in this case: SNG willfully engaged in business practices that permitted customers to conduct cash transactions with SNG of more than $10,000 while avoiding the filing of mandatory forms documenting those transactions with the United States Department of the Treasury.

The BSA requires financial institutions involved in cash transactions in amounts greater than $10,000 to file Currency Transaction Reports (CTRs) for each transaction. Similarly, businesses that receive more than $10,000 in cash in one or related transactions are required to file an IRS 8300 form. Many individuals involved in illegal activities, such as tax evasion and money laundering, are aware of these reporting requirements and take active steps to cause financial institutions and businesses to fail to file the necessary forms. These active steps are usually referred to as “structuring,” which is a violation of the BSA.

Although SNG never knowingly received illicit funds, SNG permitted and enabled its customers and employees to structure millions of dollars in cash transactions into SNG’s bank accounts without the filing of CTRs, broke up customer invoices totaling more than $10,000 and willfully failed to file a single 8300 form prior to the government’s investigation.

In 2012, SNG had over $300 million in gross sales receipts. Of that amount, approximately $80 million was made in the form of cash deposits.

Beginning in 2007, SNG instituted a policy that permitted its customers to purchase hair products by depositing cash directly into SNG’s bank accounts. This policy enabled SNG’s customers to regularly structure cash deposits into SNG’s accounts. SNG’s employees also structured funds into SNG’s accounts after collecting the funds from customers. SNG employees were instructed not to issue an invoice or receipt that exceeded $10,000, even when a customer ordered more than $10,000 in hair products at one time.

In addition to the forfeiture, SNG has agreed to implement a number of remedial measures: SNG has appointed and will continue to engage a general counsel to oversee and consult on all legal and compliance issues. SNG will also retain a qualified independent consulting firm, as approved by the United States, to oversee the implementation of a BSA compliance program and SNG’s continued compliance with that program and the terms of SNG’s agreement with the United States.

For a two-year period from the date of the filing of the Complaint, SNG will: provide quarterly reports to the United States, to be authored by the independent consulting firm, describing the state of SNG’s compliance program; appoint a qualified individual, approved by the United States, to serve as a senior level executive to oversee all day-to-day compliance issues – removing that responsibility from the Chief Financial Officer; and establish and enforce written policies on how to receive and process cash payments and how to otherwise comply with the BSA, including the timely filing of any and all 8300 forms.

SNG will also implement mandatory employee training on BSA compliance; will not permit its customers to deposit cash directly into accounts controlled by SNG; and will agree to cooperate with any and all future investigations by the United States and/or other state and local authorities.

The $15 million forfeiture amount includes $2,502,218 previously seized by the United States from SNG on June 25, 2013, and an additional $9,497,782 that SNG has surrendered pursuant to the agreement. As part of that nearly $9.5 million, individual shareholders of SNG have contributed $6 million as claw-backs of profit distributions. Recognizing the extensive costs associated with the remedial measures, the United States has agreed to provide a $3 million credit to SNG.  However, in the event that SNG knowingly fails to comply with the agreement, SNG has agreed to surrender that $3 million to the United States.

U.S. Attorney Fishman credited special agents from HSI’s El Dorado Task Force, under the direction of Special Agent in Charge James T Hayes Jr., New York Field Office.

The government is represented by Assistant U.S. Attorneys Evan S. Weitz of the U.S. Attorney’s Office Asset Forfeiture and Money Laundering Unit and Aaron Mendelsohn of the office’s Economic Crimes Unit in Newark.

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Defense counsel: Alex Lipman Esq., New York

Shake-N-Go Complaint
Shake-N-Go Settlement

NEWARK, N.J. - A Hudson County, N.J., man was sentenced today to 96 months in prison for distributing images and videos of child sex abuse over the Internet, U.S. Attorney Paul J. Fishman announced.

Jonathan Martin, 24, of Jersey City, N.J., and Short Hills, N.J., previously pleaded guilty before U.S. District Judge Stanley R. Chesler to Count One of an indictment charging him with knowing distribution of child pornography. Judge Chesler imposed the sentence today in Newark federal court.

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

Martin admitted that on April 30, 2012, he made images and videos of child sexual abuse that were stored on his home computer available for others to download via an online peer-to-peer file-sharing network. On that date, an undercover law enforcement agent successfully downloaded from Martin 15 images files of child pornography via the file sharing network.

In addition to the prison term, Judge Chesler sentenced Martin to five years of supervised release and ordered him to pay $35,000 in restitution.

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, and the Jersey City Police Department, under the direction of Chief Robert Cowan, with the investigation leading to today’s sentencing.

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

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Defense counsel: Alan Zegas Esq., Chatham, N.J.

NEWARK, N.J. – A registered sex offender who was formerly employed at a law office in Paterson, N.J., admitted today to distributing images of child sexual abuse over the Internet, U.S. Attorney Paul J. Fishman announced.

Kevin Rease, 33, of Hackettstown, N.J., pleaded guilty today before U.S. District Judge Dennis M. Cavanaugh in Newark federal court to Count One of an indictment charging him with distributing images of child pornography.

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

Rease admitted that on Feb. 12, 2013, he made images and videos of child sexual abuse stored on his work computer available for others to download via an online peer-to-peer file sharing network. On that date, an undercover law enforcement agent successfully downloaded videos of child sexual abuse from Rease through the file sharing network.

Rease has a prior federal conviction for transportation of child pornography as well as prior state convictions for luring, sexual assault by sexual contact and endangering the welfare of a child.

As a previously convicted sex offender, the distribution of child pornography count to which Rease pleaded guilty is punishable by a maximum potential penalty of 40 years in prison, a mandatory minimum sentence of 15 years in prison, and a maximum fine of $250,000.  Sentencing is currently scheduled for April 28, 2014.

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 with the investigation leading to the guilty plea.

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

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Defense counsel: William B. Ware Esq., Chester, N.J.                                                                                                  

Rease Indictment

TRENTON, N.J. – Special agents of the FBI arrested a Monmouth County man at his home this morning after discovering alleged images of child sexual abuse on his computer, U.S. Attorney Paul J. Fishman announced.

Layne Bracht, 31, of Highlands, N.J., is charged by complaint with one count of possessing child pornography. He made his initial court appearance today before U.S. Magistrate Judge Lois H. Goodman in Trenton federal court and was remanded without bail.

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

On Oct. 28, 2013, Bracht allegedly distributed on the Internet via peer-to-peer file sharing software, through which other users had access, a video and images depicting child sexual abuse. Special agents of the FBI executed a search warrant this morning at his residence in Highlands, seizing digital evidence that contained numerous videos and images depicting child sexual abuse, including material involving prepubescent minors and sadistic or masochistic conduct. The digital evidence seized included three files previously downloaded from Bracht by law enforcement agents working in an undercover capacity on the peer-to-peer network.

In 2006, Bracht was arrested and charged with possession of child pornography, a charge to which he subsequently pleaded guilty. On April 2, 2008, U.S. District Judge Joseph E. Irenas sentenced Bracht to 30 months in prison to be followed by five years of supervised release. As a previously convicted sex offender, Bracht faces a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of 20 years in prison and a $250,000 fine if convicted of the possession offense.

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, and the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Grammicioni, with the investigation leading to today’s arrest.

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

Bracht Complaint

NEWARK, N.J. – An Essex County, N.J., man today admitted his role in an armed carjacking in Newark on Nov. 8, 2012, U.S. Attorney Paul J. Fishman announced.

Nathaniel Tullies, 20, of East Orange, N.J., pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with one count of theft of a motor vehicle by force, violence, and intimidation, and one count of use of a firearm in furtherance of a crime of violence.

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

On Nov. 8, 2012, when an individual got out of a 2006 Chevrolet Impala to open a garage door, Tullies and an accomplice got on either side of the car, took it from the victim at gunpoint and drove away. The victim called police, who responded within minutes.  A Newark police detective spotted the vehicle and a high-speed chase ensued, ending when the Impala crashed on the shoulder of Routes 1/9, the suspects fled on foot and the detective chased and captured Tullies.

The carjacking charge to which Tullies pleaded guilty is punishable by a maximum potential penalty of 15 years in prison. The firearms charge to which Tullies pleaded guilty is punishable by a minimum consecutive term of seven years in prison and a maximum consecutive term of life in prison. Each of these charges also carries a maximum $250,000 fine.

U.S. Attorney Fishman credited detectives with the Essex County Prosecutor’s Office, under the Direction of Acting Prosecutor Carolyn A. Murray, and investigators in the U.S. Attorney’s Office with the investigation leading to today’s guilty plea.  Sentencing is scheduled for April 28, 2014.

The government is represented by Assistant U.S. Attorneys Elizabeth M. Harris and Sara F. Merin of the Criminal Division in Newark.

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

Tullies Information

NEWARK, N.J. – The deputy director of the Hudson County Correctional Center surrendered today to law enforcement and was charged by complaint with illegally wiretapping fellow employees, U.S. Attorney Paul J. Fishman announced.

Kirk Eady, 45, of East Brunswick, N.J. is charged by complaint with one count of intentionally intercepting the wire, oral or electronic communications of others. He is expected to make his initial court appearance today before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.

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

Between March 2012 and July 2012, Eady used the services of a publically available website to place telephone calls to four Hudson County Correctional Center employees.  The website allowed Eady to conceal the telephone numbers from where the calls originated and also call and record two people simultaneously and make it appear as those people, and not Eady, originated the call. Eady recorded these telephone conversations and did not inform the Hudson County Correctional Center employees that he was recording them. Eady admitted to a cooperating witness that he had recorded conversations with three employees.

The illegal interception offense with which Eady is charged is punishable by a maximum potential penalty of five years in prison and a $250,000 fine.

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

The government is represented by Assistant U.S. Attorney David L. Foster of the U.S. Attorney’s Office Special Prosecution’s Division.

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Defense counsel: Peter Willis Esq., Jersey City, N.J.

Eady Complaint

NEWARK, N.J. – A vendor admitted today to conspiring to pay bribes of approximately $40,000 to NJ Transit employees to obtain snow removal contracts, U.S. Attorney Paul J. Fishman announced.

Edward O’Neill, 53, of Toms River, N.J., pleaded guilty to an information charging him with one count of conspiracy to commit bribery. O’Neill entered his guilty plea before U.S. District Judge William H. Walls in Newark federal court.

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

O’Neill was the president of PPW Contracting Inc. (PPW), which provided professional powerwashing and snow removal services for NJ Transit, an agency that received more than $10,000 in federal funds. Thomas Braden, 55, also of Toms River, worked at PPW as its vice president and secretary.

From September 2011 to March 2012, O’Neill and Braden agreed to give, and gave, a cooperating witness (the “CW”) who was an NJ Transit employee, approximately $20,000 in exchange for the CW’s assistance with securing the 2011-2012 snow removal contract for the Trenton, N.J., train station. From September 2012 to April 2013, O’Neill and Braden agreed to give the CW another $20,000, $8,000 of which was to go to an NJ Transit supervisor, in exchange for their assistance with securing the 2012-2013 snow removal contract.

On Dec. 28, 2013, Braden pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to an information charging him with one count of bribery.

The conspiracy to commit bribery charge to which O’Neill pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing for O’Neill is scheduled for April 22, 2014. The bribery charge to which Braden pleaded guilty is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine. Braden is scheduled to be sentenced on March 25, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and the N.J. State Police, under the direction of Col. Joseph R. Fuentes, Superintendent, for the investigation leading to today’s guilty plea. He also thanked the N.J. Attorney General’s Office under the direction of Attorney General John Hoffman and Elie Honig, director of the N.J. Division of Criminal Justice, for their roles in the investigation.

The government is represented by Assistant U.S. Attorney Amy Luria of the U.S. Attorney’s Office Special Prosecutions Division in Newark, and Special Assistant U.S. Attorney Michael A. Monahan, the chief of the Financial and Computer Crimes Bureau, Division of Criminal Justice, in the N.J. Office of the Attorney General. 

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Defense counsel:  Robert L. Galantucci Esq., Hackensack, N.J.

O'Neill, Edward Information
Braden, Thomas Information

NEWARK, N.J. – Two Essex County, N.J., men arrested in connection with two gunpoint carjackings and an attempted carjacking in December 2012 are expected to make their initial appearances today in Newark federal court, U.S. Attorney Paul J. Fishman announced.

Jamie Manning, 28, and Corey Thermitus, 21, both of Newark, are each charged in a superseding complaint with one count of conspiracy to commit theft of a motor vehicle by force, violence and intimidation (carjacking); two counts of carjacking; and one count of attempted carjacking. Additionally, Thermitus is charged with one count of discharging of a firearm in furtherance of a crime of violence, and Manning is charged with one count of brandishing a firearm in furtherance of a crime of violence. Manning and Thermitus are scheduled to appear this afternoonbefore U.S. Magistrate Judge Joseph A. Dickson.
 
Manning was arrested on Jan. 5, 2013, and has been in custody in Essex County since that time; he was taken into federal custody today to face these charges. Thermitus has been in custody since his arrest by Newark police officers on Dec. 29, 2012, and was previously charged by federal complaint with offenses related to a carjacking he allegedly committed the previous day. A superseding complaint charging both men was recently filed in Newark federal court.

According to documents filed in this case and statements made in court: During the early morning hours of Dec. 26, 2012, Manning and Thermitus approached two individuals entering a parked 2002, four-door Nissan Altima on a street in Newark. Manning pointed a firearm at one of the victims and both Manning and Thermitus ordered the victims to get out of the car. After robbing and threatening the victims, Manning and Thermitus fled the area in the carjacked vehicle.

On Dec. 28, 2012, Thermitus approached an individual sitting in a 2011, four-door Honda Accord that was parked in the driveway of a home in Newark. Thermitus pointed a firearm at the victim and ordered the victim to get out of the car. After threatening to shoot the victim, Thermitus, Manning and another man fled the area in the victim’s car.

Later that night, Thermitus, Manning and a third man drove in the carjacked Honda Accord to a residential area in Newark. Thermitus and Manning approached two individuals, one of whom was a young child, who were sitting in a parked 2006, four-door Nissan Pathfinder in the driveway of a residence. Thermitus pointed a gun at the driver of the vehicle while Manning approached the rear passenger side of the vehicle, but the driver managed to escape in the car. As the assailants fled in the Honda Accord, Thermitus fired a gun in the direction of an individual who had come outside of a residence to investigate.

The conspiracy count carries a maximum potential penalty of five years in prison. The carjacking and attempted carjacking counts each carry a maximum potential penalty of 15 years in prison. The charge of brandishing a firearm in furtherance of a crime of violence carries a maximum potential penalty of life in prison and a mandatory minimum sentence of seven years in prison, which must run consecutively to any other prison term. The charge of discharging a firearm in furtherance of a crime of violence carries maximum potential penalty of life in prison and a mandatory minimum sentence of 10 years in prison, which must run consecutively to any other prison term. Each count also carries a maximum $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; and the Newark Police Department, under the leadership of Director Samuel A. DeMaio and Chief Sheilah A. Coley with the investigation leading to the charges.

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

The charges and allegations contained in the superseding complaint are merely accusations and the defendants are considered innocent unless and until proven guilty.
           
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Defense counsel: Corey Thermitus: Assistant Federal Public Defender Peter Carter, Newark
Jamie Manning: Frank Arleo Esq., West Orange, N.J..

Thermitus, Corey and Manning, Jamie Superseding Complaint

$57.8 Million in Civil and Criminal Actions, $62.4 Million in Forfeitures

NEWARK, N.J. – U.S. Attorney Paul J. Fishman announced today that the District of New Jersey collected $120,229,018.44 in FY 2013, which includes $57,792, 671.44 in criminal and civil actions, and – working with partner agencies and divisions – it collected an additional $62,436,347in asset forfeiture actions.

The $57.8 million represents collections of $45,157,311.66 in criminal actions and $12,635,359.78 in civil actions. The $62.4 million in forfeited assets brought in by the office and its partners are deposited into the Department of Justice Assets Forfeiture Fund and are used to restore funds to crime victims and for a variety of law enforcement purposes. U.S Attorney Fishman created a stand-alone Asset Forfeiture and Money Laundering Unit in April 2010, which has increased the forfeited funds applied to victim compensation each year.

Every year since I have been U.S. Attorney, the hardworking public servants in our office have collected far more in fines, penalties, asset forfeiture, restitution and settlements than our operating expenses,” said U.S. Attorney Fishman. “Most of that money goes to the general treasury of the United States, the share that belongs to victims of crime is returned to them, and some of it is shared with our state and local law enforcement partners. That is good economics and good for public safety.”

Attorney General Eric Holder announced last week that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.

“The Department’s enforcement actions help not only to ensure justice is served, but also to deliver a valuable return to the taxpayer,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the Department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”

Fiscal year 2013 is the first year the Justice Department is counting collections as shared totals in any case in which a U.S. Attorney’s Office was assisted by other U.S. Attorney’s Offices or department components, making for uneven office-specific comparisons to previous years. The department’s overall numbers are not affected by the change.

The New Jersey U.S. Attorney’s Office worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional$401,338,597.30in cases pursued jointly with these offices. Of this amount, $56,796.50 was collected in criminal actions and401,281,800.80was collected in civil actions.

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

Nationwide, the largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals, corporations or both for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

Many of the District of New Jersey’s largest collections this year arose from the office’s health care practice.

As a result of investigations by the New Jersey U.S. Attorneys’ Office and the Justice Department’s Civil Division, New Jersey-based Par Pharmaceutical Companies Inc. (Par) pleaded guilty in Newark federal court on March 5, 2013, and agreed to pay $45 million to resolve its criminal and civil liability for the company’s promotion of its prescription drug Megace® ES for uses not approved as safe and effective by the Food and Drug Administration (FDA) and not covered by federal health care programs.

This year’s collections also include more than $10.2 million paid to the United States as a result of an agreement between the Cooper Health System (Cooper) and the U.S. Attorney’s Office for the District of New Jersey in which Cooper paid $12.6 million to settle allegations that it violated the federal False Claims Act and New Jersey False Claims Act by making improper payments to physicians under so-called “consulting” and “compensation” agreements as it sought to build its cardiology program. Additionally, $2.3 million went directly to the state of New Jersey for Medicaid as a result of the agreement.

Both cases were investigated by the Department of Health and Human Services, Office of Inspector General. Assistance in the Cooper case was provided by the N.J. Attorney General’s Office. Par was also investigated by the FDA’s Office of Criminal Investigation.

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TRENTON, N.J. - The former president of Vonetex LLC today admitted that he paid nearly $100,000 in kickbacks to benefit himself under a subcontract to a Transportation Security Administration (TSA) contract for high-tech phone systems.
           
Neil Metzger, 41, of Leesburg, Va., pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with conspiracy to pay kickbacks in connection with a government contract.

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

Metzger was the president of Vonetex, 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 for work on the contract. James Anderson, 55, of Gainsville, Ga., was a project manager at Unisys who managed work performed pursuant to the contract. Vickie Idoux-Walz, 48, of Gainsville, Ga., was in a romantic relationship with Anderson, but was not an employee of Vonetex, Unisys, or Izar.

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

In December 2008, Metzger entered into a written agreement with Idoux-Walz in which   Vonetex agreed to 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.

Metzger admitted that he paid a total of approximately $97,850 in kickbacks to Anderson through Idoux-Walz. 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.

The count of conspiracy to pay kickbacks in connection with a government contract to which Metzger pleaded carries a maximum potential penalty of five years in prison and a $250,000 fine. Metzger has also agreed to pay the government $100,000 in restitution. Sentencing is scheduled for April 22, 2014.

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: Michael Sullivan Esq., Morristown, N.J., and Danny Onorato Esq., Washington, D.C.

Metzger, Neil Information

NEWARK, N.J.— A Union County, N.J., man today admitted distributing images of child sexual abuse over the Internet, U.S. Attorney Paul J. Fishman announced.

Andrew Johnson, 30, of Cranford, N.J., pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of distribution of child pornography.

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

Johnson admitted that on Dec. 7, 2012, he made available for others to download via an online peer-to-peer file-sharing network images and videos of child pornography that were stored on his home computer. An undercover law enforcement agent successfully downloaded from Johnson one image and 14 videos of child pornography via the file sharing network.

As part of his guilty plea, Johnson agreed to forfeit the computers and computer accessories he used to commit the offense. He will also be required to register as a sex offender.

The count of distributing child pornography to which Johnson pleaded guilty carries a mandatory minimum penalty of five years in prison, a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for April 22, 2014.

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; and the Cranford Police Department with the investigation leading to today’s guilty plea.

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

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Defense counsel: Lorraine Gauli-Rufo Esq., Assistant Federal Public Defender, Newark

Johnson Information

TRENTON N.J. – The owner of pizzeria in Manhattan admitted today to underreporting on his tax returns more than $500,000 in income that he kept for his personal benefit, U.S. Attorney Paul J. Fishman announced.

Amadeus Manata, of Warren, N.J., pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an information charging him with one count of subscribing to false personal federal income tax returns.

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

For the tax years 2005 through 2007, Manata filed U.S. individual income tax returns in which he claimed to report all of his income from his pizzeria, Pizza Pasta Etc., but which omitted $563,343 in cash he had diverted from the businesses for his personal use. Manata’s intentional failure to disclose true, correct and complete information to the IRS resulted in a tax loss to the United States of approximately $190,712.

As part of his guilty plea, Manata agreed to make full restitution to the IRS for all losses resulting from his filing of false tax returns.

The count of subscribing to false tax returns is punishable by a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is currently scheduled for April 16, 2014.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea.

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

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Defense Counsel: Arthur Zucker Esq., Hackensack, N.J.

Manata, Amadeus Information

NEWARK, N.J. – A pharmacist with a compounding pharmacy in Lakewood, N.J., was arrested today and charged with paying more than $50,000 to a Toms River, N.J., physician to induce the doctor to make prescription referrals to the pharmacy, U.S. Attorney Paul J. Fishman announced.

Vladimir Kleyman, 42, of Lakewood, N.J., the president and pharmacist in charge of Prescriptions R US – a compounding pharmacy in Lakewood – was charged with violating the Anti-Kickback Statute by using a middle-man to provide repeated cash payments – totaling at least tens of thousands of dollars – to a N.J. physician over the course of several months. Kleyman appeared before U.S. Magistrate Judge James Clark III in Newark federal court this afternoon.

According to the Complaint unsealed today:

Beginning in February 2013, Kleyman provided one of his employees with at least $50,000 in cash or checks to provide bribes to the physician to refer prescriptions for a compounded pain cream to Prescriptions R US. Pharmacy compounding describes the preparation of medication, using different types and dosages of drugs, in order to provide more personalized medications for patients. The compounded pain cream prepared by Prescriptions R US in this case contains several components, including ketamine (a Schedule III non-narcotic), lidocaine, and diclofenac.

A computer-generated document prepared by Kleyman or someone working with him, and purporting to reflect the names of 63 patients for whom prescriptions for the pain cream had been sent by the bribed physician referenced in the complaint, included at least 33 Medicare beneficiaries for whom Prescriptions R US had received reimbursement from Medicare for prescriptions referrals from the bribed physician. In 2013, Prescriptions R US obtained more than $40,000 from Medicare alone in connection with filling prescriptions for the bribed physician referenced in the complaint – separate and apart from additional money Prescriptions R US obtained from other health care insurance providers.

In a series of meetings in November and December 2013, the unidentified employee received more than $50,000 in cash or checks from Kleyman or Kleyman’s spouse – who also works at Prescriptions R US – with the understanding that the bulk of that money would be used to bribe the physician to make prescription referrals to Prescriptions R US.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the ongoing investigation leading to today’s charges.

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

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $520 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 charges and allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

14-011                                      

Defense counsel: Lisa Mack Esq., Assistant Federal Public Defender, Newark                                                           

Kleyman Complaint

NEWARK, N.J. – A resident of Ohio admitted today to defrauding a charter flight company and other luxury brands of more than $100,000 worth luxury goods and services, U.S. Attorney Paul J. Fishman announced.

Christopher L. Henderson, 32, of Akron, Ohio, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to an information charging him with wire fraud.

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

From May through June of 2013, Henderson 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., which provides charter flight services.  Henderson and others also conspired to obtain tens of thousands of dollars in other luxury goods and services, all via sham lines of credit issued to a well-known financial institution, for the defendants’ and others’ use by misrepresenting that they were employees at the financial institution.

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. That individual identified himself as being employed as a senior vice president at a well-known financial institution and provided an email address purporting to be affiliated with the financial institution. A Jet Aviation employee sent a draft Charter Services Agreement to the provided email address. 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 Henderson as a vice president of international affairs at the well-known financial institution. The aviation company established an account and a line of credit for $350,000, which the defendants and others used to take four private charter flights.

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

Henderson 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, and sterling silver and leather business cardholders, and incurred approximately $25,500 in hotel stays at a luxury hotel in Miami.

As a result of the scheme, Henderson fraudulently obtained more than $135,000 in luxury goods and services.

The wire fraud charge to which Henderson pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a fine of $250,000. Sentencing is scheduled for April 15, 2014.

Dante G. Dixon, a co-defendant in this case, pleaded guilty on Dec. 17, 2013, to an information charging him with conspiracy to commit wire fraud. Dixon’s sentencing is scheduled for April 23, 2013.

U.S. Attorney Fishman credited special agents of the Federal Bureau of Investigation, 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 Aaron Mendelsohn 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.

13-010                                         

Defense counsel: Joshua P. Cohn Esq., Saddle Brook, N.J.

Henderson, Christopher Information

Investigation Led to Conviction of More Than 600 American Subscribers to Illegal Site

NEWARK, N.J. – A Ukrainian man who founded and ran an international hardcore child sexual abuse website today admitted his role in a child exploitation enterprise and agreed to a 30-year prison term, U.S. Attorney Paul J. Fishman announced.

Maksym Shynkarenko, 35, of Kharkov, Ukraine, pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to Count 31 of an indictment charging him with conducting a child exploitation enterprise in connection with a website he operated between 2005 and 2008. Shynkarenko was initially detained in Thailand in January 2009 pending extradition. He was transported to the United States and has been in custody in the United States since making his initial court appearance in June 2012.

The investigation into the website Shynkarenko operated has led to convictions in 47 states of more than 600 American consumers of hardcore images of children being sexually assaulted and abused.

“The guilty plea of Maksym Shynkarenko is the capstone to an operation that has led to the imprisonment of hundreds of offenders who traded in recorded images of horrific child abuse and torture,” U.S. Attorney Fishman said. “Because of today’s technology, the images of that abuse will be available for years. It’s fitting that Shynkarenko will spend the next three decades of his life in a prison cell paying for the pain from which he has profited.”

“The HSI investigation leading to today’s plea resulted in convictions of 600 American consumers of child pornography in 47 states, dozens of whom were previously convicted sex offenders,” Andrew McLees, special agent in charge of HSI in Newark, said. “Today’s plea again underscores HSI’s commitment to taking those who distribute and sell graphic images and videos of child pornography off the street. Shynkarenko founded and operated a website that offered subscribers access to thousands of despicable images and videos of child sexual abuse. As we did in this case, HSI and our international law enforcement partners will continue to use every tool at our disposal to track down those who exploit children and bring them to justice.”

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

From at least 2005 through mid-2008, Shynkarenko operated from Ukraine a website that he helped design, and which offered access to thousands of images and videos of child sexual abuse. Subscribers typically paid a fee of $79.99 for a 20-day subscription to the website. Shynkarenko worked in conjunction with other individuals, including an individual from Siberia who helped process credit card payments in a way that disguised the true nature of what was purchased. Shynkarenko and the other individuals operating the website granted access to images and videos of child pornography to subscribers on hundreds of occasions from 2005 to 2008. Shynkarenko said he worked with other individuals who advertised the child pornography website over the Internet under names such as “Illegal.CP” and “Pedo Heaven.”

Agents of U.S. Immigration and Customs Enforcement, Homeland Security Investigations, first located the child pornography website operated by Shynkarenko in October 2005 – based in part on e-mails recovered from the computer of an individual in Long Branch, N.J. At that time, the banner page of the site identified it as “Illegal.CP,” and the page featured more than a dozen images of minors engaged in sexual acts with other minors and adults. That page declared “[n]ow you are in [sic] few minutes away from the best children porn site on the net!” and “[i]f you join this site you will get tons of uncensored forbidden pics . . . forbidden stories, of course, many videos.” The words “join now” appeared at the top and bottom of the page.

An ICE agent, acting in an undercover capacity, purchased a 20-day subscription to the “Illegal.CP” website in October 2005 and the next day received an e-mail that provided a login and a password and indicated that the credit card charges for $79.99 would appear on the subscriber’s credit card bill as “ADSOFT.” Upon accessing the “Illegal.CP” website, the initial page warned subscribers as follows:

FAQ, Please read. “Our site is considered to be illegal in all countries....Even if you ever have problems with police, you can always say that someone had stolen the information from your credit card and used it. It is very difficult to establish that you were the person to pay.”

ICE HSI agents determined that the site contained thousands of what appeared to be images of child sexual abuse, both still images and videos, and that it offered the purchase of additional videos through the website.

Working with the U.S. Attorney’s Office for the District of New Jersey, ICE HSI agents in Newark were able to identify hundreds of individuals who subscribed to the “Illegal.CP” website between November 2005 and February 2006. Those leads, largely developed through agents’ monitoring of the website, led to what became a three-phase investigation: Operation Emissary, Emissary II, and Thin Ice. In late 2006, agents recovered a database of hundreds of additional individuals whose credit cards had been processed while subscribing to the “Illegal.CP” website. During the third phase in 2008, the continued investigation by ICE HSI agents focused more on the operators of the website, including Shynkarenko, and recovered evidence of hundreds of additional individuals who had attempted to subscribe.

The leads, along with master search warrants prepared by the New Jersey U.S. Attorney’s Office, were distributed to ICE HSI offices and U.S. Attorney’s Offices throughout the nation. The investigation has led to the conviction of more than 600 individuals in 47 states, making the investigation one of the most successful child sexual abuse investigations in the nation’s history. A list of the more than 600 American consumers convicted as a result of the investigation and the sentences they received is appended to this release.

The child exploitation enterprise count to which Shynkarenko pleaded guilty carries a maximum potential penalty of life imprisonment and a mandatory minimum sentence of 20 years in prison. Under the terms of the plea agreement, the court will sentence Shynkarenko to a term of 30 years in prison. The count also carries a maximum fine of $250,000 or twice the gross amount of any pecuniary gain derived from the offense. Sentencing is scheduled for April 15, 2014.

U.S. Attorney Fishman credited special agents of ICE HSI, under the direction of Special Agent in Charge Andrew McLees, for the investigation leading to today’s guilty plea. He also thanked the United States Marshals Service, under the direction of U.S. Marshal Juan Mattos Jr., for its work in transporting Shynkarenko from Thailand, as well as acknowledging the important work of Thai authorities. U.S. Attorney Fishman also thanked the numerous ICE HSI offices and U.S. Attorney’s Offices around the country who prosecuted the cases that secured the 600 convictions achieved during Operations Emissary and Operation Thin ICE, and thanked the Department of Justice’s Office of International Affairs and Child Exploitation and Obscenity Section for their important roles. He noted the invaluable assistance provided by MasterCard and Visa officials during the course of the investigation.

The government is represented by Assistant U.S. Attorneys Mark J. McCarren and Danielle Walsman of the U.S. Attorney’s Office in Newark and Assistant U.S. Attorney Harvey Bartle in Trenton.

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Defense counsel: Nicholas Wooldridge Esq. and Arkady Bukh Esq., Brooklyn, N.Y.

Shynkarenko Indictment
Thin Ice - Emissary Offender List

Claimed Her Business Was Owned and Operated by a Service-Disabled Veteran

NEWARK, N.J. – A Bergen County, N.J., woman was arrested this morning on charges that she fraudulently represented her company as a service-disabled veteran-owned small business in order to obtain more than $1.2 million worth of government contracts set aside for disabled veterans, U.S. Attorney Paul J. Fishman announced.

Miriam Friedman, 54, of Teaneck, N.J., surrendered to special agents from the U.S. Department of Veterans Affairs (VA), Office of the Inspector General, as a result of a federal criminal complaint charging her with wire fraud. She is scheduled to make her initial appearance today before U.S. Magistrate Judge James B. Clark III in Newark federal court.   

According to the complaint unsealed today:

Friedman is the owner of Office Dimensions Inc., a company in Teaneck that sells furniture and design services to industrial and government customers. Friedman and her husband control Office Dimensions and all its revenues, as well as run the company’s daily operations. Neither served in the U.S. military, but Friedman’s father-in-law is a retired U.S. military veteran.

On Nov. 23, 2009, Friedman certified in a central registry for government contractors that Office Dimensions was a service-disabled veteran-owned small business. In her certification, she allegedly falsely claimed that her father-in-law was the owner and operator, even though he had very little involvement with Office Dimensions and was not service-disabled. Friedman then bid for VA contracts set aside for service-disabled veterans who own their businesses.

From January 2010 through November 2011, the VA paid Office Dimensions more than $1.2 million on fraudulently obtained contracts to which Friedman was not entitled.

The wire fraud count with which Friedman was charged is punishable by a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross loss or gain cause by the offense.

U.S. Attorney Fishman credited special agents of the U.S. Department of Veterans Affairs, Office of the Inspector General, under the direction of Special Agent in Charge Jeffrey G. Hughes; the U.S. General Services Administration, Office of the Inspector General, under the direction of Special Agent in Charge James E. Adams; and IRS - Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s arrest.   

The government is represented by Assistant U.S. Attorney Scott B. McBride of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit in Newark.

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

14-008                                           

Defense counsel: Brian J. Neary Esq., Hackensack & Hoboken, N.J.                    

Friedman Complaint

NEWARK, N.J. – A Colorado man today admitted his role in a conspiracy to transport women across state lines for prostitution in New Jersey and other states, U.S. Attorney Paul J. Fishman announced.

James Roy Smith, 36, a/k/a “Mister Smith,” of Lakewood, Colo., pleaded guilty before U.S. District Judge Stanley R. Chesler to a superseding information charging him with conspiracy to transport women across state lines to work as prostitutes, and transportation of a victim across state lines with the intent that the victim work as a prostitute.

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

From February 2009 through June 27, 2010, Smith conspired to operate a prostitution business in numerous locations around the United States, including New Jersey, New Mexico, Nebraska, and Pennsylvania. The women would be transported between states by air as well as in a Cadillac Escalade registered to Smith’s uncle. In order to attract and locate local customers, the conspirators would place advertisements for escort services on Craigslist as well as Backpage. com.

Smith admitted that in late June 2010, he conspired to transport six women from New Jersey to Philadelphia, Pa., to work as prostitutes. During that time, while checked in at the Econolodge in Elizabeth, N.J., he also caused a victim to be transported between these two states with the intent that the victim work as a prostitute.

The count of interstate transportation for the purpose of engaging in prostitution is punishable by a maximum potential penalty of 10 years in prison and the count of conspiracy to engage in that same offense is punishable by a maximum potential penalty of five years in prison. Both counts are also punishable by a fine of $250,000. Sentencing is scheduled for April 29, 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 to today’s guilty plea. He also thanked FBI offices in Omaha, Neb., and Salt Lake City, Utah; the Union County, N.J., Prosecutor’s Office; the Elizabeth, N.J., Police Department; and the Clay County, Neb., Sheriff’s Office for their roles.

The government is represented by Senior Litigation Counsel Leslie F. Schwartz of the U.S. Attorney’s Office Criminal Division in Newark.

14-007                                              

Defense counsel: Brooke M. Barnett Esq., Newark

Smith, James Roy Superseding Information

NEWARK, N.J. – A Colorado man today admitted his role in a conspiracy to transport women across state lines for prostitution in New Jersey and other states, U.S. Attorney Paul J. Fishman announced.

James Roy Smith, 36, a/k/a “Mister Smith,” of Lakewood, Colo., pleaded guilty before U.S. District Judge Stanley R. Chesler to a superseding information charging him with conspiracy to transport women across state lines to work as prostitutes, and transportation of a victim across state lines with the intent that the victim work as a prostitute.

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

From February 2009 through June 27, 2010, Smith conspired to operate a prostitution business in numerous locations around the United States, including New Jersey, New Mexico, Nebraska, and Pennsylvania. The women would be transported between states by air as well as in a Cadillac Escalade registered to Smith’s uncle. In order to attract and locate local customers, the conspirators would place advertisements for escort services on Craigslist as well as Backpage. com.

Smith admitted that in late June 2010, he conspired to transport six women from New Jersey to Philadelphia, Pa., to work as prostitutes. During that time, while checked in at the Econolodge in Elizabeth, N.J., he also caused a victim to be transported between these two states with the intent that the victim work as a prostitute.

The count of interstate transportation for the purpose of engaging in prostitution is punishable by a maximum potential penalty of 10 years in prison and the count of conspiracy to engage in that same offense is punishable by a maximum potential penalty of five years in prison. Both counts are also punishable by a fine of $250,000. Sentencing is scheduled for April 29, 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 to today’s guilty plea. He also thanked FBI offices in Omaha, Neb., and Salt Lake City, Utah; the Union County, N.J., Prosecutor’s Office; the Elizabeth, N.J., Police Department; and the Clay County, Neb., Sheriff’s Office for their roles.

The government is represented by Senior Litigation Counsel Leslie F. Schwartz of the U.S. Attorney’s Office Criminal Division in Newark.

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Defense counsel: Brooke M. Barnett Esq., Newark

Smith, James Roy Superseding Information

CAMDEN, N.J. – A Gloucester County, N.J., man admitted today that he distributed images of child sexual abuse over the Internet, U.S. Attorney Paul J. Fishman announced.

Gerrett Conover, 48, of Woolwich Township, N.J., pleaded guilty before U.S. District Judge Noel L. Hillman in Camden to Count Three of the indictment against him, distribution of child pornography. Conover has been in custody since his arrest.

According to documents filed in this case and statements made in court: On Sept. 16, 2012, Conover was intercepted at the United States border on his way from Canada into New York and was found in possession of a laptop containing images of sexually exploited children. Agents obtained a search warrant for Conover’s home in Woolwich Township and seized various computers and other media containing additional images of child sexual abuse. The search also uncovered materials allegedly establishing Conover’s involvement in the Boy Scouts between 1990 and 2000.

At his guilty plea proceeding, Conover admitted that he knowingly distributed images of children engaged in sexually explicit conduct.

The distribution charge to which Conover pleaded guilty is punishable by a mandatory minimum penalty of five years in prison and a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for April 15, 2014.

U.S. Attorney Fishman credited special agents of Immigration and Customs Enforcement, Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Andrew M. McLees, with the investigation. He also thanked HSI Offices in Boston; Messina, N.Y.; Los Angeles; and San Bernardino, Calif.; as well as Customs and Border Protection in Ogdensburg, N.Y., for their roles.

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

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Defense counsel: Jerome Brown Esq., Philadelphia

Conover Indictment

NEWARK, N.J. – An Oklahoma man previously employed as a textbook salesman for a New Jersey-based publisher was sentenced today to one year and one day in prison for stealing more than $2.8 million dollars in textbooks from his former employer through an elaborate scheme that involved diverting free educational samples intended for professors, U.S. Attorney Paul J. Fishman announced.

Christopher J. Brock, 45, of Yukon, Okla., previously pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to wire fraud. Judge Cavanaugh imposed the sentence today in Newark federal court.

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

Brock executed a scheme to defraud his former employer, John Wiley & Sons (Wiley), out of more than $2.8 million worth of textbooks, which he then resold for approximately $450,000. Wiley is based in Hoboken, N.J., and is one of the largest publishers of technical writing in the world, with an estimated market value of approximately $3 billion. A portion of Wiley’s publications are collegiate textbooks, which are distributed to schools and universities.

Brock lived in Oklahoma and was employed by Wiley, first as a higher education publishing representative, and most recently as a district sales supervisor based in Oklahoma. Brock accessed the corporate systems of Wiley — including computers located in New Jersey — and diverted to himself more than 16,000 textbooks and other items he fraudulently designated as free educational samples.

To avoid detection in a review of his employee records within the internal order system, Brock designated both actual and fabricated professors as the purported recipients of the items, and then Brock listed his own home address and other addresses that he controlled as alternate shipping addresses for those professors and directed that the books be shipped to those alternate addresses. This made it appear in the records of Wiley that the free education samples were legitimately going to professors when, in reality, they were being sent to Brock.

Once Brock received the diverted textbooks he sold them to resellers and received payment through PayPal accounts that he controlled. PayPal, in turn, would deposit the funds into bank accounts that Brock controlled.

In total, Brock made approximately $450,000 reselling the textbooks that he stole from Wiley. These textbooks had a retail value of over $2.8 million. The money that Brock earned as a result of the scheme was largely used for personal expenditures, including, among other things, high-end home furnishings and scuba diving equipment.

In addition to the prison term, Judge Cavanaugh sentenced Brock to two years of community service. Restitution will be determined at a later date.

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. U.S. Attorney Fishman also thanked John Wiley & Sons for its cooperation and assistance with the investigation.

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

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Defense counsel: Robert L. Johnston Esq. Oklahoma City, Okla.                                                                                            

TRENTON, N.J. — A New Jersey insurance broker and the former mayor of Toms River, N.J., were each sentenced today for offenses arising from separate schemes involving officials of Toms River and the former insurance broker for the Toms River Regional School District Francis X. Gartland, U.S. Attorney Paul J. Fishman announced.

Frank Cotroneo, 63, of Chester, N.J., an insurance broker with an office in Morristown, N.J., was sentenced to 37 months in prison and ordered to pay more than $12.4 million in restitution to the Toms River School District and in forfeiture to the United States. Cotroneo previously pleaded guilty before former Chief U.S. District Judge Garrett E. Brown Jr., to one count each of bribery and tax evasion arising from his participation in a scheme to pay hundreds of thousands of dollars in bribes to Michael J. Ritacco, 67, of Seaside Park, N.J., the former superintendent for the Toms River Regional School District, in exchange for his official assistance.

Carmine C. Inteso Jr., 47, of Toms River, was sentenced today to six months in prison and six months of house arrest for evading his income tax obligations. Inteso, who was arrested in July 2012 after returning from Afghanistan where he had been working as a contractor, pleaded guilty in December 2012 before U.S. District Judge Joel A. Pisano to one count of tax evasion.

From 2002 through 2007, Inteso held the positions of Township Committee member, mayor, deputy mayor, and councilman for the Township of Toms River, formerly known as Dover Township. 

Inteso allegedly took a job in Afghanistan after learning he was the target of the tax investigation and, after returning to the United States, was taken into custody at New York’s John F. Kennedy International airport.

Judge Pisano imposed the sentences today in Trenton federal court.

According to documents filed and statements made in court:

Cotroneo admitted that from 2002 to April 2009, he and co-conspirators Gartland and Frank D’Alonzo, a former administrator at the Toms River Regional School District, paid bribes and other benefits to Michael J. Ritacco, who was then the superintendent of the district. The payments were made to allow Cotroneo and Gartland, 72, of Baltimore, Md., – insurance co-brokers for the school district – to obtain and keep the lucrative insurance brokerage contracts with the district. To facilitate the scheme, Ritacco, Gartland and Cotroneo agreed to have Ritacco approve a workers’ compensation insurance contract between Gartland and the school district, which yielded between $500,000 and $600,000 annually in excess fees. Those proceeds were to be used to make hundreds of thousands of dollars in bribes to Ritacco.

Cotroneo also admitted that for tax years 2005 to 2007, he evaded the assessment of hundreds of thousands of dollars of federal income taxes by concealing the illegal proceeds he received from Gartland and others during the course of the bribery scheme.

Ritacco and Gartland were ordered previously to pay $4,336, 987.91 in restitution to the school district. Judge Pisano today ordered Cotroneo to pay $3,275,677.65 in restitution, which represented the loss to the school district while he was an active participant in the scheme. In addition to ordering restitution, the court ordered that Cotroneo forfeit to the United States a sum of $9,126,200.16, which represented the proceeds derived from the scheme. D’Alonzo was ordered to pay $1,625,952.79 in restitution, and also ordered to forfeit a sum of approximately $4.3 million. Gartland was previously ordered to forfeit $11 million, which represented the total proceeds derived from the fraudulent scheme. Prior to his sentencing on Sept. 14, 2012, Ritacco forfeited to the United States $1 million, a 2010 Mercedes Benz, and $8,950 in cash.

In addition to the prison term and payments, Judge Pisano sentenced Cotroneo to serve three years of supervised release.

In a separate and unrelated scheme beginning in 2005 and continuing through 2008, Inteso accepted hundreds of thousands of dollars in payments from Gartland, an insurance broker whose companies provided insurance brokerage services for New Jersey municipal entities including the Brick Township Board of Education and the Township of Toms River. Inteso directed Gartland to make the payments to a company Inteso controlled and that had ceased operating by 2007. Gartland pleaded guilty to charges of mail fraud, conspiracy to defraud the IRS and perjury and was sentenced to 135 months in prison.

Inteso used the funds to pay for his personal expenses and withdrew significant amounts of cash. Despite receiving approximately $291,000 in income from the insurance broker during calendar years 2006, 2007 and 2008, Inteso failed to file personal income taxes for those years.    

In addition to the prison term, Judge Pisano sentenced Inteso to serve two years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen. The Office of International Affairs in the Justice Department’s Criminal Division and the Diplomatic Security Service’s Regional Security Office in Kabul, Afghanistan provided invaluable assistance in the Inteso case.

The government is represented by Assistant U.S. Attorney Lee M. Cortes Jr., of the U.S. Attorney’s Office Special Prosecutions Division in Newark. 

14-006                                                         

Defense counsel:

Carmine Inteso: Scott A. Krasny Esq., West Trenton, N.J.
Frank Cotroneo: Howard Brownstein Esq., Union City, N.J.

NEWARK, N.J. — Two former chief executive officers of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey – have been charged for their alleged participation in a scheme to pay bribes to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA), to defraud PetroTiger, and to launder proceeds of those crimes. In addition, PetroTiger’s former general counsel pleaded guilty to bribery and fraud charges in connection with the same scheme.

U.S. Attorney Paul J. Fishman of the District of New Jersey, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement after the charges and guilty plea were unsealed today.

 “Bribery of public officials, whether at home or abroad, corrupts business opportunity and undermines trust in government,” said U.S. Attorney Fishman. “The under-the-table deals alleged in today’s charges are not an acceptable way of doing business.”

“We have said – repeatedly and emphatically – that foreign corruption, whether committed by companies or by the individuals entrusted to run those companies, will not be tolerated. And, our track record in vigorously enforcing the FCPA has shown that message to be undeniably true,” said Acting Assistant Attorney General Raman. “The charges unsealed today against two former CEOs of PetroTiger and the guilty plea announced today of the former general counsel reaffirm our clear message that we will prosecute corruption and fraud wherever we find it. Bribery distorts what should be a level playing field and deprives corporations and governments of funds that should instead be used to strengthen those institutions. Today’s announcement should be a reminder to CEOs and other executives who seek to corrupt the system at the expense of honest businesses: we are not going away.”

“The FBI is committed to pursuing those who disrupt the level playing field to which companies in the U.S. and around the world are entitled,” said FBI Special Agent in Charge Ford.  “We will continue to investigate these matters by working with law enforcement agencies, both foreign and domestic, to ensure that both corporations and executives who bribe foreign officials for lucrative contracts are punished.”

According to the charges, former co-CEOs of PetroTiger Joseph Sigelman, 42, of Miami and the Philippines, and Knut Hammarskjold, 42, of Greenville, S.C.; former general counsel Gregory Weisman, 42, of Moorestown, N.J.; and others allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million.

Hammarskjold was arrested Nov. 20, 2013, at Newark Liberty International Airport.  Sigelman was arrested on Jan. 3, 2014, in the Philippines and appeared this afternoon (ChST) in Guam before U.S. Magistrate Judge Joaquin V.E. Manibusan III. Sigelman will have an initial appearance in New Jersey federal court on a date to be determined. Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013, with conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money and substantive violations of the FCPA.

Weisman pleaded guilty on Nov. 8, 2013, to a criminal information charging one count of conspiracy to violate the FCPA and to commit wire fraud.  The charges and guilty plea were also unsealed today.

The charges allege the defendants made three separate payments from PetroTiger’s bank account in the United States to the official’s bank account in Colombia to secure approval from Colombia’s state-owned and state-controlled oil company for a lucrative oil services contract in the country.  According to the charges, to conceal the bribes, the defendants first attempted to make the payments to a bank account in the name of the foreign official’s wife for purported consulting services she did not perform. The charges allege that Sigelman and Hammarskjold provided Weisman invoices including her bank account information.  The defendants made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed.

In addition, court documents allege that the defendants attempted to secure kickback payments at the expense of PetroTiger’s board members. According to the criminal charges, the defendants were negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition. In exchange for negotiating a higher purchase price for the acquisition, two of the owners of the target company agreed to kick back to the defendants a portion of the increased purchase price. According to the charges, to conceal the kickback payments, the defendants had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments, and used the code name “Manila Split” to refer to the payments amongst themselves.

The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.

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

The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter.  The department also thanks the Republic of the Philippines, including the Bureau of Immigration, for its assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.

The case is being investigated by the FBI’s Newark Division.  The case is being prosecuted by Assistant U.S. Attorney Aaron Mendelsohn of the District of New Jersey and Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section. 

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

14-005                                           

Defense counsel:

Joseph Sigelman: Patrick Civille Esq., Guam (for purposes of initial appearance only)
Knut Hammarskjold: Assistant Federal Public Defender Lori M. Koch Esq., Camden
Gregory Weisman: Michael A. Schwartz Esq., Philadelphia

Sigelman Complaint
Hammarskjold Complaint
Weisman Information

NEWARK, N.J. – A doctor with a family medicine practice in New Jersey admitted today to accepting 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.

Joel Fischgrund, 60, of Livingston, N.J., pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to one count of accepting bribes.

Including Fischgrund, 22 people – 11 of them physicians – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.

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

Fischgrund today admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid $1,500 a month under a sham consulting agreement. As part of the purported agreement with Advantech Sales LLC, he was required to fill out a sheet – titled “Consultant Advisory Board Data Sheet” – that only took minutes to complete. Fischgrund admitted he knew the questions on that sheet had no real value to Advantech and were designed to disguise the bribe payments.

The bribery count to which Fischgrund pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for April 1, 2014. As part of his guilty plea, Fischgrund agreed to forfeit 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 FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty pleas.

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

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $520 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.

14-003                    

Defense counsel: Edward Dauber Esq., Newark                                                                                                                         

Fischgrund Information