District of New Jersey

NEWARK, N.J. – A Brooklyn, N.Y., man who was arrested in April in connection with a Bergen County bank robbery will make his initial court appearance today, U.S. Attorney Paul J. Fishman announced.

John Edward Stevens, 59, is charged by Complaint with one count of bank robbery and is scheduled to make his initial appearance before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court today. Stevens was on the FBI’s 10 Most Wanted Fugitives List in 1988 in connection with unrelated robberies.

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

On April 15, 2013, Stevens allegedly robbed the TD Bank, located in Oakland, N.J. According to bank employees and video surveillance, a male wearing a blue jacket and a baseball hat entered the bank and approached one of the bank tellers. The robber was carrying a zipper pouch, which he opened and showed the teller. Inside was what appeared to be a black handgun. The robber fled after the teller gave him money.

Approximately 20 minutes after the robbery, law enforcement stopped a vehicle that was reported stolen. The driver of the stolen vehicle was identified as Stevens. Law enforcement arrested Stevens and located a TD Bank bag filled with money in the vehicle.

If convicted of the bank robbery charge, Stevens faces 20 years imprisonment and a $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. He also thanked the Waldwick Police Department and the Oakland Police Department for their contribution to the case.

The government is represented by Assistant U.S. Attorney Danielle M. Corcione of the U.S. Attorney’s Office General Crimes 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.

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Stevens Complaint

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

Klary Arcentales, 44, of Lyndhurst, N.J., was charged in a five-count Indictment with one count of conspiracy to commit bank fraud and four counts of bank fraud, all of which caused losses of at least $2 million.

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

As early as 2006, Arcentales engaged in a mortgage fraud conspiracy through a company called Premier Mortgage Services (PMS). Arcentales, a loan officer at PMS, provided 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. Relying upon those false documents, financial institutions funded mortgage loans. Arcentales then profited illegally by receiving a commission from PMS for each mortgage loan that she closed and also profited illegally by diverting portions of the fraudulently-obtained mortgage proceeds for herself.

Conspirator Lester Soto, 56, previously charged by Complaint, was a part-owner of PMS. He also acted as a loan officer on certain PMS mortgage loan applications. Soto took a percentage of PMS’s profits. Soto employed document makers to create fraudulent documents in furtherance of the scheme and put loan officers at PMS, including Arcentales, in contact with these document makers to create other false and fraudulent documents.

Conspirator Linda Cohen, 55, previously charged by Complaint, was a paralegal who closed transactions on behalf of a licensed New Jersey attorney. Cohen 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 forms – which itemize services and fees charged to borrowers for mortgage loans – that purported to reflect the sources and destinations of funds for mortgages on subject properties. In fact, the HUD-1s were neither true nor accurate. At or following the closings, Cohen disbursed mortgage loan proceeds directly to PMS, herself, and others, including in amounts not reflected on the HUD-1s. Cohen received a fee for each fraudulent loan in which she participated.

Conspirator Antonio Pimenta, 45, previously charged by Complaint, owned and managed Kelmar Construction Co., which built properties that were then sold to straw buyers utilizing fraudulent mortgage loans brokered by Arcentales.

The Indictment charges Arcentales with one count of bank fraud conspiracy and four counts of bank fraud, each punishable by a maximum potential penalty of 30 years in prison and a fine of $1,000,000.

U.S. Attorney Fishman credited special agents of the FBI, 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, for the investigation leading to today’s charges. 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 of the U.S. Attorney’s Office General Crimes Unit and Zach Intrater of the Economic Crimes Unit in Newark.

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

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

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Defense counsel: Arcentales: Ronald Ricci Esq., Woodland Park, N.J.
Soto: Jeff Smith Esq., of Teaneck, N.J.
Cohen: Brian Daly Esq., of Middletown, N.J.
Pimenta: Linda Foster Esq., Assistant Federal Public Defender, Newark

Arcentales Indictment

One Conspirator Allegedly Committed Crimes While Federally Indicted in Unrelated Scam

NEWARK, N.J. – Federal law enforcement officers with the FBI and IRS-Criminal Investigationarrested three menat their homesthis morning on charges they stole approximately $6.7 million from an investor, in part by claiming special access to shares in the social media company Facebook Inc., prior to the company’s initial public offering, New Jersey U.S. Attorney Paul J. Fishman announced.

One of the men, Eliyahu Weinstein, 37, of Lakewood, N.J., faces additional charges for allegedly committing the fraud while under federal indictment in New Jersey for a separate real estate investment scheme.

Weinstein, Alex Schleider, 47, of Lakewood, and Aaron Muschel, 63, of Brooklyn, N.Y., are expected to appear on the charges this afternoon before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.

“According to the charges, the defendants took advantage of the buzz around the Facebook IPO to fleece unsuspecting investors,” said U.S. Attorney Fishman. “Shamelessly, Eliyahu Weinstein allegedly committed these crimes while under federal indictment for another investment scheme, even using stolen money to pay his legal fees. Today’s arrest should put an end to his brazen conduct.”

“Today’s charged conduct is another example of the cautionary tale that if an opportunity seems to be too good to be true, it probably isn’t,” said FBI Special Agent in Charge Aaron T. Ford. “More than ever, the investing public must exercise the appropriate amount of due diligence before investing with new or unknown entities. This is highlighted by the fact that one of today’s charged individuals is currently awaiting sentencing on a previous fraud conviction.”

According to the complaint in this case and other documents filed in court:

In February of 2012, Weinstein and his fellow conspirators offered investors the opportunity to purchase large blocks of Facebook shares prior to the company’s IPO in May 2012. The offer was particularly attractive because large blocks of the shares were extremely difficult to get, and they were expected to increase in value at the time of the IPO. Weinstein, Schleider and Muschel did not actually have access to the shares.

Based on misrepresentations by Weinstein, Schleider, Muschel and another conspirator, an investor victim – described in the complaint as “G.C.” – wired millions of dollars between February and March of 2012 to an account Weinstein and a conspirator controlled. Weinstein and Schleider convinced G.C. to send the money by, among other things, providing the victim with false documents showing companies owned by various conspirators held assets which would secure G.C.’s investment.
 
The conspirators did not use any of G.C.’s money to purchase Facebook shares, instead misappropriating it for their own use and benefit by moving it through various accounts.  Weinstein used some of the money to pay lawyers and experts representing him in his pending criminal case and in pending civil matters. Weinstein, Schleider and Muschel also used G.C.’s money to make investments in a number of different businesses unrelated to Facebook, and to make loans for their own benefit.

Throughout the scheme, Weinstein was under indictment and on pretrial release, and was prohibited from engaging in any monetary transaction for more than $1,000 without the approval of court-appointed special counsel. Weinstein pleaded guilty in January 2013, before U.S. District Judge Joel A. Pisano in Trenton, N.J., to two counts of that indictment, admitting he ran a real estate investment fraud scheme that caused $200 million in losses and then laundered the proceeds of the scheme.

Weinstein, Schleider and Muschel are variously charged in the 13-count complaint unsealed today. The charges against each and the maximum potential penalty per count are as follows:

Count(s)

Charge

Charged Defendants

Maximum Potential Penalty/Count

wire fraud conspiracy

Weinstein, Schleider, Muschel

20 years in prison; $250,000 fine, or twice the gain or loss from the offense

2 – 6

wire fraud while on pretrial release

Weinstein

30 years in prison (10 years consecutive to 20 years for wire fraud); $250,000 fine, or twice the gain or loss from the offense

7 – 13

transacting in criminal proceeds

Weinstein, Muschel

10 years in prison; $250,000 fine, or twice the gain or loss from the offense

Additionally, the government is seeking the seizure and forfeiture of all funds fraudulently obtained by the defendants, including three pieces of real property allegedly maintained with the proceeds of the scheme.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Ford in Newark, for their work leading the investigation of this case. He also credited special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for their important contributions.

The government is represented by Counsel to the U.S. Attorney Rachael A. Honig; Assistant U.S. Attorneys Gurbir S. Grewal and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit; and Evan S. Weitz of the Office’s Asset Forfeiture and Money Laundering Unit.

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

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

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Defense counsel:

Eliyahu Weinstein: Henry E. Klingeman Esq., Newark; Mark D. Harris Esq., New York

Alex Schleider: Andrew Citron Esq., Forest Hills, N.Y.

Aaron Muschel: James T. Moriarty Esq., New York

Weinstein, Eliyahu et al. Complaint

Cache Included Military-Style Assault Rifles, Handguns and Shotgun

NEWARK, N.J. – A South Carolina man was sentenced today to 120 months in prison for his role in transporting into New Jersey 22 firearms that were stolen from gun shops in Tennessee and North Carolina, U.S. Attorney Paul J. Fishman announced.                                               

Bevan Holston, 41, of Columbia, S.C., previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an Information charging him with one count of transporting stolen firearms in interstate commerce. Judge Wigenton imposed the sentence today in Newark federal court.

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

On March 7, 2012, Bassir Baxter, 40, of Columbia, S.C., Cedric Reddick, 20, and, his father, Holston allegedly drove from South Carolina to the apartment of Terrell James, 23, of Newark, to illegally sell the firearms. All four were charged by Complaint with transporting stolen firearms in interstate commerce.

The four men allegedly entered the apartment, where there were approximately 10 other individuals, and displayed firearms on the floor for the potential buyers. In total, 22 guns were recovered, including semi-automatic handguns and military-style assault rifles. Twenty had been stolen March 1, 2012, from a gun shop in Bristol, Tenn. Two of the guns had been stolen Feb.16, 2012, from a gun shop in Boone, N.C. Police arrested James and Baxter inside the apartment.  Reddick and Holston were arrested after jumping to a rooftop from the kitchen window.

In addition to the prison term, Judge Wigenton sentenced Holston to three years of supervised release. The other three defendants are awaiting sentencing.

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Thomas J. Cannon; 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 direction of Director Samuel DeMaio and Police Chief Sheilah Coley, with the investigation leading to today’s sentence.

The government is represented by Assistant U.S. Attorney José R. Almonte of the U.S. Attorney's Office Narcotics/OCDETF Unit.

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Defense counsel: Stephen Dratch Esq., Livingston

Forfeits $200,000 in Ill-Gotten Gains to the United States

NEWARK, NJ – A Passaic County, N.J., man today admitted participating in a multi-year, international conspiracy to traffic in counterfeit goods, U.S. Attorney Paul J. Fishman announced.

Aref Abuhadba, 49, of Totowa, N.J., pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to an Information charging him with one count of conspiring to traffic in counterfeit goods. As part of his guilty plea, Abuhadba presented the government with a check for $200,000 today, representing his ill-gotten gains from his involvement in the conspiracy.  

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

From 2003 through 2010, Abuhadba and others conspired to import counterfeit Nike sneakers and counterfeit Walt Disney-brand comforters and blankets from the People’s Republic of China (PRC) for resale in the United States. Abuhadba worked in concert with a conspirator in the PRC, who acted as a middleman between the manufacturers of counterfeit goods in the PRC and Abuhadba in the United States. The conspirator purchased counterfeit goods from manufacturers in the PRC and arranged for them to be shipped various ports of entry within the United States. Once the containers arrived, other conspirators arranged for them to be delivered to warehouses and other locations throughout the United States controlled by Abuhadba, who would then distribute the counterfeit goods to customers throughout the United States.

Abuhadba was also responsible for collecting money from customers and wiring the proceeds of the scheme to the conspirators. For his participation, Abuhadba received a fee of up to $42,000 for each container that was successfully imported into the United States. If a container was seized by law enforcement, however, Abuhadba was sometimes responsible for a portion of the costs of the goods in the seized container.

According to e-mails reviewed by law enforcement during the investigation, in late 2008, a number of containers with contents valued in the millions of dollars were seized by U.S. Customs and Border Protection (CBP). On Sept. 17, 2008, CBP agents inspected a container at Los Angeles/Long Beach Seaport in Long Beach, Calif., destined for Abuhadba in New Jersey. There were more than 10,000 pairs of counterfeit Nike Air Force One sneakers, bearing various Nike trademarks in the container. The approximate cost of the goods seized was approximately $200,000, and their approximate retail value was $1.5 million. Following the 2008 seizures, Abuhadba exchanged numerous e-mails with the PRC conspirator discussing the seizures and encouraged the PRC conspirator to send false letters to the CBP concerning the seizures, stating that the seized containers were delivered by mistake and were not intended for Abuhadba.

The count to which the defendant pleaded guilty is punishable by a maximum penalty of five years in prison and a fine of up to $250,000, or twice the gross amount of any pecuniary gain derived from the offense, or pecuniary loss sustained by any victims of the offense. Sentencing is scheduled for Sept. 9, 2013.

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.

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

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Defense counsel: Edward Bilinkas and Sara Sencer McCardle Esqs., Randolph, N.J.

Abuhadba, Aref Information

NEWARK, N.J. – The owner of an aircraft parts broker in Ridgefield, N.J., will appear in Newark federal court today following his arrest last night for an alleged conspiracy to launder scrapped jet engine parts, U.S. Attorney Paul J. Fishman announced.

Gideon Vaisman, 73, of Edgewater, N.J., the sole owner of Tara Technology Corp. in Ridgefield, is charged in a criminal complaint with one count of conspiracy to commit wire fraud.  He will appear on the charges this afternoon before U.S. Magistrate Judge Madeline Cox Arleo.

According to the complaint unsealed upon Vaisman’s arrest:

Vaisman orchestrated a scheme, from April 2005 to May 2013, to defraud Federal Aviation Administration (FAA) repair stations, aircraft parts brokers, aircraft parts end-users and others by using phony documents to resell jet engine parts obtained from scrap metal dealers.

Among other things, Vaisman instructed Tara Technology’s general manager, Carmine Coviello, 61, to use his Suffern, N.Y.-based aircraft parts broker and seller company, Shelby Enterprises, to purchase vital jet engine parts called “blades” and “vanes” from scrap metal dealers. Once Coviello purchased the blades and vanes, he had them cleaned, sanded and inspected at a metal shop to conceal that they had been scrapped and on occasion rejected for repair by an FAA repair station. He did this at Vaisman’s direction and in violation of FAA regulations, which mandate that only FAA-certified repair stations or certified airframe and power plant mechanics may perform such work on aircraft parts. 

Also at Vaisman’s direction, Coviello conducted sham sales of the illegally altered blades and vanes to Tara Aviation, Ltd., an aircraft parts broker and seller – incorporated in Tortola, British Virgin Islands, and located in Guernsey, United Kingdom – which was controlled and financed by Vaisman. The sole purpose of these sales, which occurred only on paper, was to generate fraudulent trace paperwork for the parts. The parts never left New Jersey. Trace paperwork documents the history of an aircraft part and includes information such as the part’s manufacturer, the aircraft on which the part was used and how it was used. The paperwork is also employed in determining whether an aircraft or aircraft part has been subject to severe stress or heat as would occur during a major engine failure, accident or fire.

Vaisman, Coviello and a sales representative stored the blades and vanes in Tara Technology’s warehouse inventory, ultimately selling them to aircraft brokers, airlines and others on behalf of Tara Aviation using the fraudulent trace paperwork.

The count with which Vaisman is charged carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.

Coviello previously pleaded guilty, before U.S. District Judge Mary L. Cooper, to an information charging him with conspiracy to commit wire fraud in relation to the scheme. His sentencing is scheduled for Sept.12, 2013.      

U.S. Attorney Fishman credited special agents of the U.S. Department of Transportation, Office of the Inspector General, under the direction of Special Agent in Charge Douglas Shoemaker; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and criminal investigators with the U.S. Attorney’s Office with the ongoing investigation.

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

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

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Defense counsel: Edward J. Dauber Esq., Newark

Vaisman, Gideon Complaint

CAMDEN, N.J. – A Camden County, N.J., man was sentenced today to 120 months in prison for attempting to purchase 13 kilograms of cocaine for distribution in and through New Jersey, U.S. Attorney Paul J. Fishman announced.

Jamal Herrin, 40, previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an Information charging him with one count of knowingly and intentionally conspiring to distribute and possess with intent to distribute more than five kilograms of cocaine.  Judge Rodriguez imposed the sentence today in Camden federal court. 

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

The investigation into Herrin began in April 2012, when the U.S. Drug Enforcement Administration learned that Herrin – who was on bail pending state murder charges – was interested in purchasing large quantities of cocaine.    Herrin admitted that he negotiated the purchase of 13 kilograms of cocaine and amassed more than $325,000 to purchase the cocaine. 

In addition to the prison term, Judge Rodriguez sentenced Herrin to five years of supervised release.                              
U.S. Attorney Fishman credited special agents of the Drug Enforcement Administration’s Camden Resident Office, under the direction of Acting Special Agent in Charge Robert G. Koval in Newark; the Camden County Prosecutor’s Office; the Rowan University Police Department; the Winslow Township Police Department; the Gloucester County Prosecutor’s Office; and local law enforcement agencies in support of the Camden division of the Philadelphia-Camden High Intensity Drug Trafficking Areas task force.

The government is represented by Assistant U.S. Attorney Alyson M. Oswald of the U.S. Attorney’s Office Criminal Division in Camden.

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Defense counsel: Brian J. McMonagle Esq., Philadelphia                                                                                         

TRENTON, N.J. – A man who perpetrated a million-dollar investment fraud from California that defrauded New Jersey victims was sentenced today to 46 months in prison for crimes related to the scheme, U.S. Attorney Paul J. Fishman announced.

Robert Schroy, 68, of Placentia, Calif., previously pleaded guilty to a criminal information charging him with one count each of wire fraud and tax evasion. U.S. District Judge Joel A. Pisano, who accepted the plea, also imposed the sentence today in Trenton federal court.

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

From 2004 through 2009, Schroy solicited people to invest in an alleged “international bank trade.”  He admitted that he and fellow conspirators falsely promised prospective investors extraordinary gains – ranging between 10 and 100 percent per week for a minimum period of 25 weeks – plus the return of their principal investment. Based on Schroy’s misrepresentations, numerous investors, including investors in New Jersey, wired investment monies to accounts controlled by Schroy and others. Although the money was wired to the designated accounts, Schroy admitted it was not invested in any bank trade. Instead, he and other conspirators used it for personal expenditures, including automobiles, vacations and meals at restaurants. In total, Schroy admitted they misappropriated at least $1 million in investor money.

In pleading guilty to the tax evasion count, Schroy specifically admitted he failed to file a 2007 U.S. Individual Income Tax Return and failed to report $479,566 of taxable income, upon which an additional tax of $151,781 was owed to the IRS.

In addition to the prison term, Judge Pisano sentenced Schroy to serve three years of supervised release and ordered him to pay $1,540,044 in restitution.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, and the N.J. Bureau of Securities, under the direction of Bureau Chief Abbe R. Tiger, for their work in the investigation.

The government is represented by Deputy Chief Christopher J. Kelly 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.   

13-194                                                        

Defense counsel: Joshua Markowitz Esq., Lawrenceville, N.J

NEWARK, N.J. – The president of Local 148 of the Production Workers Union was sentenced today to six months in prison for conspiring with the secretary-treasurer/recording secretary to steal money from the union by taking unauthorized salary increases and bonuses, U.S. Attorney Paul J. Fishman announced.

Stephen P. Arena, 58, of Nesconset, N.Y., previously pleaded guilty before U.S. District Judge Stanley R. Chesler to Count One of a 24-count Indictment, which charged Arena with conspiracy to embezzle money and funds from Local 148. Judge Chesler imposed the sentence today in Newark federal court.

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

Local 148 of the Production Workers Union of the Allied, Novelty, and Production Workers of America, located in Jersey City, N.J., represents workers from various trades, including bus drivers, hotel workers, and factory workers.

Arena, the union’s president, and David J. Caivano, its secretary-treasurer/recording secretary, conspired to embezzle money belonging to Local 148 by giving themselves unauthorized salary increases and bonuses with no legitimate union purpose and which had not been authorized by the union or its members. Arena admitted he conspired with Caivano to embezzle money from the union.

Caivano pleaded guilty before Judge Chesler to unlawfully engaging in a financial transaction with a labor union and was sentenced to three years of probation.

In addition to the prison term, Judge Chesler sentenced Arena to two years of supervised release and fined him $5,000. Arena’s plea agreement also requires him to repay the union approximately $110,000 in restitution.

U.S. Attorney Fishman credited special agents of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert L. Panella; investigators from the U.S. Department of Labor, Office of Labor Management Standards, New York District Office, under the direction of District Director Andriana Vamvakas, with the investigation leading to today’s sentence.

The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney Office’s Organized Crime/Gangs unit, in Newark.

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Defense counsel: Nicholas G. Kaizer Esq., New York

TRENTON, N.J. – The central organizer of a worldwide conspiracy to manipulate stock prices through a “botnet” network of virus-controlled computers was sentenced today in Trenton federal court to 71 months in prison, New Jersey U.S. Attorney Paul J. Fishman announced.

Christopher Rad, 44, of Cedar Park, Texas, was previously convicted, following a 9-day jury trial, of six counts arising from the fraud scheme: conspiring to further securities fraud using spam; conspiring to transmit spam through unauthorized access to computers; and four counts of transmission of spam by unauthorized computers.

The sentence was imposed by U.S. District Judge Joel A. Pisano, who also presided over the trial.

“Christopher Rad’s use of hackers to drive his pump-and-dump scheme illustrates a trend toward the modern mechanization of old-school scams,” said U.S. Attorney Fishman. “Law enforcement is constantly anticipating and adapting as criminals operate in a more virtual – and more global – world. As a result, Rad will spend years in prison for manipulating our markets to steal his millions.”

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

Rad conspired with stock promoters in a scheme to manipulate the price and volume of dozens of particular stocks, including stocks with ticker symbols RSUV, QRVS, VSHE, SVXA and ASIC, in order to later sell them at an artificially inflated price – a practice known as a “pump and dump” scheme. The scheme began as early as November 2007 and continued through February 2009.

As part of the scheme, Rad organized others to manipulate the stock prices. He sought out and engaged spammers, then sent them precise language to include in their spam campaigns.

The spammers included two individuals who distributed spam through botnets. To create a botnet, viruses were sent out to infect computers around the world, creating a virtual army of hijacked computers. The spammers then caused the botnets to distribute spam to promote the stocks Rad wanted to manipulate. Infected computers were found in New Jersey, Europe, Russia and elsewhere. The botnet was controlled from command and control servers located overseas, including in Russia and China.

Rad, who went by the alias “billy_sack,” communicated with the spammers by Skype, in most instances knowing them only by their aliases. During the 22-month conspiracy, Rad paid the spammers more than $1.4 million, making payments through e-Gold and money wires. Payments intended for a botnet operator in Russia were made through at least eight different countries. The wire instruction notations included false information such as payments for “Dell Monitors,” “touch panels” and “transportation services.”

Rad also agreed with others to engage in bad-faith purchases of RSUV to create the impression among spam recipients that there was active trading in the stock.

At the same time, hackers hacked into the brokerage accounts of third parties, liquidated the stocks in those accounts, then used the accounts to purchase shares of some of the stocks the scheme sought to manipulate. This increased the volume of shares being traded and created an impression that the stocks were worth purchasing.

In all, Rad made approximately $2.8 million from his schemes.

In addition to the prison term, Judge Pisano sentenced Rad to serve five years of supervised release and ordered him to pay a $30,000 fine. Restitution will be determined at a later date.

Rad’s coconspirators, Doyle Scott Elliott and James Bragg, previously pleaded guilty to securities fraud and transmission of spam through falsely registered e-mail addresses. They await sentencing.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation. He also thanked the U.S. Securities and Exchange Commission’s Division of Enforcement, led by Acting Director George Canellos.

The government is represented by Assistant U.S. Attorney Andrew S. Pak, of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit (ECU); Christopher J. Kelly, Deputy Chief of the ECU; and Erez Liebermann, Deputy Chief of the Office’s Criminal Division in Newark.

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

13-191

Defense counsel: Francis Montenegro Esq., Austin, Texas

CAMDEN, N.J. – A Morris County, N.J., man was sentenced today to 180 months in prison for using hidden cameras to record young girls in his home, U.S. Attorney Paul J. Fishman announced.

Ronald Oshrin, 50, of Budd Lake, N.J., previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez, to an Information charging him with one count of production of child pornography. Judge Rodriguez imposed the sentence today in Camden federal court.

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

Oshrin admitted that between 2007 and April 2012, he installed hidden cameras in a bedroom and a bathroom of his home in order to record nine young girls in various states of undress. Oshrin edited the videos to produce still photographs and, during that time period, distributed the videos and the still photographs over the Internet. He also admitted to sexual contact with certain minors.

U.S. Attorney Fishman credited special agents of the FBI Newark Division’s Cyber Crime Task Force, under the direction of Special Agent in Charge Aaron T. Ford, and the Mount Olive Police Department, under the direction of Chief Mark Spitzer, for the investigation leading to the charge. He also thanked the Morris County Prosecutor’s Office for their role in the investigation.

In addition to the prison term, Judge Rodriguez sentenced Oshrin to 10 years of supervised release.

The government is represented by Assistant U.S. Attorney Robert Frazer, Chief of the General Crimes Unit, and Assistant U.S. Attorney Elizabeth M. Harris of the U.S. Attorney’s Office General Crimes Unit in Newark.

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

TRENTON, N.J. – A Hudson County, N.J., man today admitted his role in paying bribes valued at $49,000 to a bank officer at Mariner’s Bank in Edgewater, N.J., to renew a $3.5 million line of credit, U.S. Attorney Paul J. Fishman announced.

Rolando Cribeiro, 49, of North Bergen, 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 bank bribery.

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

Cribeiro was the owner of CP Building Corp., a/k/a C&P Floor Covering Inc., a/k/a C&P Building Enterprises, a/k/a Roly’s Carpet, a general contracting company located in West New York, N.J.

In 2008, Cribeiro was financially unqualified to renew a previously approved $3.5 million line of credit with Mariner’s Bank. Cribeiro made multiple payments to a bank officer who was assigned responsibility for Cribeiro’s line of credit. The corrupt payments were made in exchange for the bank officer renewing and continuing the line of credit. Cribeiro gave the bank officer a check for $6,500 and cash payments of approximately $5,000 and $3,500. Cribeiro also provided the bank officer with a rent-free apartment in Cribeiro’s apartment building in Newark, relieving the bank officer of approximately $35,000 in rent payments.

The bank bribery charge carries a maximum potential penalty of 30 years in prison and a maximum fine of $1 million. Sentencing is currently scheduled for Sept. 5, 2013.

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

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

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Defense counsel: Arthur P. Zucker Esq., Hackensack, N.J.

Cribeiro Information

TRENTON, N.J. - A Monmouth County, N.J., man today admitted using a computer in his home to distribute images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Nathan Brochstein, 40, of Wayside, N.J., pleaded guilty today before U.S. District Judge Mary L. Cooper in Trenton federal court to an information charging him with one count of distribution of child pornography.

According to documents filed in this case and statements made in court: Brochstein admitted making images and videos depicting child sexual abuse available to others on the Internet via peer-to-peer file sharing software. He also admitted possessing more than 600 images of child sexual abuse on his computer and external hard drive, which were seized from his residence in November 2012. Brochstein acknowledged that among the images and videos of child pornography he possessed and distributed were images and videos that portrayed sadistic or masochistic conduct or other depictions of violence and included images of a prepubescent minor. 

The count to which Brochstein pleaded guilty carries a mandatory minimum penalty of five years in prison and a maximum potential penalty of 20 years in prison, followed by a mandatory minimum of five years of supervised release and a $250,000 fine. Sentencing is scheduled for Sept. 9, 2014.

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

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

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Defense counsel: Robert Weir Esq., Red Bank, N.J.

Brochstein, Nathan Information

CAMDEN, N.J. – Three former employees of The Vacation Ownership Group LLC admitted to conspiring to defraud owners of timeshare properties by offering phony consulting services, U.S. Attorney Paul J. Fishman announced. One of the defendants also admitted to illegally collecting unemployment benefits.

Jeffrey Sawyer, 50, of Mullica Hill, N.J., pleaded guilty today before U.S. District Court Judge Noel L. Hillman in Camden federal court to an Information charging him with one count of conspiracy to commit mail and wire fraud.

Steven Cox, a/k/a “Steve Coluzzi,” 49, of Ventnor, N.J., pleaded guilty on May 7, 2013 before Judge Hillman to a Superseding Information charging him with one count of conspiracy to commit mail and wire fraud.

Eric K. Reiff, a/k/a “Skip,” a/k/a “Skip Ray,” 41, of Ocean City, N.J., pleaded guilty on May 1, 2013, before Judge Hillman to an Information charging him with one count of conspiracy to commit mail and wire fraud and one count of wire fraud.

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

The Vacation Ownership Group, a/k/a VO Group LLC, had offices in Mays Landing and Egg Harbor Township, N.J., and claimed to offer consulting services to owners of timeshares, including cancelling, purchasing and upgrading the timeshares.

In 2010, the four defendants started working at the VO Group and were trained by VO Group managers to call customers using prepared scripts. The defendants each called customers and gave the customers the false impression that they were working for a bank or lending institution. After hearing defendants’ false representations, some customers sent checks to the VO Group. Reiff falsely told an individual with the initials “SK” that SK could settle all of SK’s timeshare debt for a “one time” price and induced SK to send a check for $21,328.28 to the VO Group. Cox told “NP” that NP could settle his timeshare debt for a large discount by mailing a $26,585 check to the VO Group. Sawyer pretended to be a satisfied VO Group customer to persuade others to send money to the VO Group. Each defendant admitted causing substantial losses: Sawyer admitted causing more than $70,000 in losses; Reiff admitted causing more than $120,000 in losses; and Cox admitted causing more than $200,000 in losses.

Reiff also admitted to devising a separate scheme to defraud the N.J. Department of Labor by collecting unemployment compensation benefits while working at the VO Group. Reiff admitted to applying for and being awarded $12,600 in unemployment compensation benefits to which he was not entitled.

On Jan. 23, 2013, co-owners Adam Lacerda and Ashley Lacerda and other members of the VO Group were charged in a Superseding Indictment with conspiracy to commit mail and wire fraud and other charges. Additional members of the VO Group were also charged by Criminal Complaint in April 2012. As for the Lacerdas and other defendants who have not been convicted in this case, the charges and allegations against them are merely accusations and they are considered innocent unless and until proven guilty.

The mail and wire fraud conspiracy charge to which the three defendants pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. The wire fraud charge to which Reiff pleaded guilty is also punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.

Sentencings are scheduled as follows: Sawyer and Cox, Sept. 27, 2013; Reiff, Sept. 20, 2013.

U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident
Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert Panella, New York Region, for their roles in the investigation leading to the guilty pleas. He also thanked the N.J. Department of Labor, Benefit Payment Control Unit, for its assistance.

The government is represented by Assistant U.S. Attorneys Alyson M. Oswald and R. David Walk, Jr. of the U.S. Attorney’s Office Criminal Division in Camden.

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Defense counsel: Reiff: Troy Archie Esq., Cinnaminson, N.J.
Sawyer: Mark E. Roddy Esq., Pleasantville, N.J.
Cox: Jeffrey M. Miller Esq., Philadelphia

Reiff Information
Sawyer Information
Cox Superseding Information

NEWARK, N.J. – A Passaic County, N.J., man was arrested today after law enforcement officers discovered alleged child pornography at his residence, U.S. Attorney Paul J. Fishman announced.

Anthony Chiampi, 48, of Totowa, N.J., is charged by criminal Complaint with one count of possessing images of child sex abuse. Chiampi is scheduled to appear today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.

According to the criminal Complaint; Chiampi is a Megan’s Law registrant, having been previously convicted in New Jersey Superior Court, Passaic County, for endangering the welfare of a child. He is subject to community supervision for life. On March 14, 2013, as part of that supervision, N.J. Division of Parole (“N.J. Parole”) officers conducted a home visit and discovered 63 disks that contained alleged images and videos depicting child sexual abuse, including material that involved prepubescent minors.

Because of his prior conviction, Chiampi faces a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of 20 years, and a $250,000 fine.

U.S. Attorney Fishman credited the N.J. State Parole Board and special agents of the FBI Newark Division’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and with the investigation leading to today’s arrest.

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

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Defense counsel:

Chiampi, Anthony Complaint

TRENTON, N.J. – A Mercer County, N.J., man will have his initial court appearance on child pornography charges in New Jersey after having been arrested by local authorities in Panama and returned to the United States in early April, where he was arrested by special agents from the Department of Homeland Security, U.S. Attorney Paul J. Fishman announced.

Fredy Arbito, 31, of Hightstown, N.J., is charged by Complaint with one count of possession of child pornography. He is scheduled to make his initial appearance this afternoon before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court.

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

As early as Jan. 28, 2013, Arbito knowingly and willfully possessed at least three images of child pornography, which were produced and transported by computer. Emails of a sexual nature allegedly sent by Arbito to a 14-year-old girl in Ecuador were traced back to an account at Arbito’s address in Hightstown.

The charge of possessing child pornography carries a maximum potential penalty of 10 years in prison and a $250,000 fine. U.S. Attorney Fishman praised special agents of the Department of Homeland Security’s Immigration and Customs Enforcement, Homeland Security Investigations, in New Jersey under the direction of Special Agent in Charge Andrew M. McLees, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office Criminal Division in Trenton.

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Defense counsel: David Oakley Esq., Princeton, N.J.

Arbito Complaint

NEWARK, N.J. – A former Newark police officer admitted today that he conspired with another individual to fraudulently obtain payments under the federal public housing assistance program known as “Section 8,” U.S. Attorney Paul J. Fishman announced.

Suliaman Kamara, 31, of Newark, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an Information charging him with one count of agreeing with another individual to obtain Section 8 public housing benefits to which they were not entitled.

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

The Section 8 Program is a federal public housing assistance program administered by the U.S. Department of Housing and Urban Development (HUD) to provide rent subsidies to qualified low-income individuals. HUD provided federal grant money to the Newark Housing Authority (NHA) for the Section 8 Program. Under the NHA’s Section 8 Program, a tenant’s rental assistance was based upon the tenant’s anticipated family gross income. Tenants receiving Section 8 assistance from the NHA had to inform the Newark Housing Authority of all the members of the household and the annual household income.

From September 2006 to December 2011, Suliaman Kamara, then a Newark police officer, lived in Newark with another individual (S.L.) who was receiving Section 8 benefits. For most of that time they lived in a property owned by Kamara. They agreed they would not disclose to the NHA that they were living together so that Kamara’s income would not be taken into account in determining whether S.L. qualified for Section 8 benefits. Kamara and S.L. submitted fraudulent information and documents to the NHA where they failed to disclose that Kamara lived with S.L and was earning household income. Kamara and S.L. obtained more than $60,000 in Section 8 benefits to which they were not entitled.

The Information to which Kamara pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Aug. 12, 2013.

U.S. Attorney Fishman credited special agents of the U.S. Department of Housing and Urban Development, under the direction of Special Agent in Charge Cary Rubenstein, for the investigation of this case.

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

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

Kamara Information

TRENTON, N.J. - A Rahway, N.J., man who was the vice principal at Carteret High School admitted today that he possessed child pornography, U.S. Attorney Paul J. Fishman announced.

Nicholas Sysock, 53, pleaded guilty before U.S. District Judge Mary L. Cooper in Trenton federal court to an Information charging him with one count of possession of child pornography.

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

Between May 2008 and March 2011, Sysock purchased numerous DVDs that contained video recordings of child pornography from a company in Canada. During a search of Sysock’s residence in October 2012, federal investigators found these DVDs and also found printed images featuring naked children. Sysock was arrested the same day. At the time of his arrest, Sysock was the vice principal of Carteret High School.

The charge to which Sysock pleaded guilty is punishable by a maximum potential penalty of 10 years in prison and a fine of $250,000. Sentencing is scheduled for Aug. 15, 2013.

U.S. Attorney Fishman praised inspectors with the U.S. Postal Inspection Service, under the direction of Inspector Maria L. Kelokates, for the investigation leading to today’s guilty plea.

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

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

Sysock Information

TRENTON, N.J. – A Brooklyn, N.Y., man admitted today to his involvement in a plot to burglarize a pharmacy in Englishtown, N.J., and sell stolen narcotics for cash, U.S. Attorney Paul J. Fishman announced.

James Zarbailov, 22, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with one count of conspiracy to distribute and possess with intent to distribute oxycodone.

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

The Union Hill-Supremo Pharmacy in Englishtown was burglarized shortly after 4:00 a.m. on June 17, 2012. Zarbailov and his fellow conspirators filled 17 garbage bags and two cardboard boxes with merchandise from the pharmacy, including approximately 1,988 dosage units of methylphenidate, 500 dosage units of hydromorphone, 300 dosage units of Opana (a trade name for oxymorphone) and 3,800 dosage units of oxycodone – all Schedule II controlled substances.

The stock lost by the pharmacy was valued at approximately $350,000.

During today’s proceeding, Zarbailov admitted that he stole the drugs, and that he did so knowing they would be sold for profit.

The conspiracy to distribute oxycodone charge to which Zarbailov pleaded guilty carries a maximum potential penalty of 20 years in prison and a $1 million fine. Sentencing is scheduled for Aug. 22, 2013.

U.S. Attorney Fishman credited special agents of the FBI’s Red Bank Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and law enforcement officers from the Marlboro Township Police Department, under the direction of Police Chief Bruce E. Hall, for the investigation leading to today’s guilty plea.

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

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Defense counsel: Sanford Talkin Esq., New York

Zarbailov Information

TRENTON, N.J. – A Brooklyn, N.Y., man admitted today to his involvement in a plot to burglarize a pharmacy in Englishtown, N.J., and sell stolen narcotics for cash, U.S. Attorney Paul J. Fishman announced.

James Zarbailov, 22, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with one count of conspiracy to distribute and possess with intent to distribute oxycodone.

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

The Union Hill-Supremo Pharmacy in Englishtown was burglarized shortly after 4:00 a.m. on June 17, 2012. Zarbailov and his fellow conspirators filled 17 garbage bags and two cardboard boxes with merchandise from the pharmacy, including approximately 1,988 dosage units of methylphenidate, 500 dosage units of hydromorphone, 300 dosage units of Opana (a trade name for oxymorphone) and 3,800 dosage units of oxycodone – all Schedule II controlled substances.

The stock lost by the pharmacy was valued at approximately $350,000.

During today’s proceeding, Zarbailov admitted that he stole the drugs, and that he did so knowing they would be sold for profit.

The conspiracy to distribute oxycodone charge to which Zarbailov pleaded guilty carries a maximum potential penalty of 20 years in prison and a $1 million fine. Sentencing is scheduled for Aug. 22, 2013.

U.S. Attorney Fishman credited special agents of the FBI’s Red Bank Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and law enforcement officers from the Marlboro Township Police Department, under the direction of Police Chief Bruce E. Hall, for the investigation leading to today’s guilty plea.

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

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Defense counsel: Sanford Talkin Esq., New York

Zarbailov Information

NEWARK, N.J. – Law enforcement officers arrested a Union County, N.J., man today after discovering alleged child pornography on his home computer during a search following an undercover investigation, U.S. Attorney Paul J. Fishman announced.

Andrew Johnson, 29, of Cranford, N.J., is charged by complaint with one count of distributing images of child sexual abuse over the Internet. Johnson appeared on the complaint this afternoon before U.S. Magistrate Judge Steven C. Mannion in Newark federal court and was released on a $100,000 bond.

According to the criminal complaint filed today:

On July 3, 2012, Dec. 7, 2012 and April 4, 2013, Johnson distributed videos and images depicting child sexual abuse, on the Internet via peer-to-peer file sharing software, which allowed others access to the material in shared directories. An undercover agent discovered and downloaded the images and videos, and the username and IP address of the sharer was traced back to Johnson’s residence.

Johnson was arrested after FBI special agents executed a search warrant today at his Cranford home.

The possession count carries a minimum penalty of five years in prison, and a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, Newark Division’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford, and the Cranford Police Department with the investigation leading to today’s arrest.

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

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

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

Johnson, Andrew Complaint

NEWARK, N.J. – Lauryn N. Hill, the Grammy-winning singer and actress, was sentenced today to three months in prison and three months of home confinement with electronic monitoring for not reporting more than $2.3 million in income by intentionally failing to file tax returns for five years, U.S. Attorney Paul J. Fishman announced.

Hill, 37, of South Orange, N.J., previously pleaded guilty to an Information charging her with three counts of failing to file tax returns with the IRS. The sentence was imposed by U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.

According to documents filed in this case and statements made in court: In addition to being an entertainer, Hill owned and operated four sub-chapter S corporations, and her primary source of income was royalties from the recording and film industries. During 2005, 2006 and 2007, Hill received more than $1.8 Million in income from those sources, but didn’t file her tax returns for those years.

Although Hill pleaded guilty to charges specifically related to those tax years, her sentence also takes into account additional income and tax losses for 2008 and 2009 – when she also failed to file federal returns – along with her outstanding tax liability to the state of New Jersey, for a total income of approximately $2.3 million and total tax loss of approximately $1,006,517.

In addition to the prison term and home confinement, Judge Arleo sentenced Hill to serve a year of supervised release and ordered her to pay a $60,000 fine in addition to her restitution to the IRS. Judge Arleo also ordered Hill to fully cooperate with the IRS, including payment of outstanding interest and penalties on her tax obligations. 

U.S. Attorney Fishman credited special agents with IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation.

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

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Defense counsel: Nathan J. Hochman Esq., Santa Monica, Calif.

Former Biodiagnostic Laboratory Services LLC Sales Reps Acknowledge Bribing Physicians

NEWARK, N.J. – Two former sales representatives of Biodiagnostic Laboratory Services LLC (BLS) admitted today to conspiring with others to bribe doctors to refer patient blood samples to BLS, U.S. Attorney Paul J. Fishman announced.

Peter Breihof, 42, of Nutley, N.J., and William Dailey, 41, of Wall, N.J., both pleaded guilty before U.S. District Judge Stanley R. Chesler to Informations charging them with conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act.

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

On April 9, 2013, federal agents arrested BLS president and part-owner, David Nicoll, 39, of Mountain Lakes, N.J.; Scott Nicoll, 32, of Wayne, N.J., a senior BLS employee and David Nicoll’s brother; and Craig Nordman, 34, of Whippany, N.J., a BLS employee and the CEO of Advantech Sales LLC – an entity allegedly used by BLS to make illegal payments. They were charged with participating in a long-running scheme to bribe doctors to refer patient blood samples to BLS and order unnecessary tests, resulting in tens of millions of dollars in profit for the company.  The Complaint noted that two former BLS employees – Breihof and Dailey – had agreed to plead guilty and had cooperated in the investigation.

Between 2006 and 2013, BLS, headquartered in Parsippany, N.J., and entities it funded paid millions of dollars to physicians to induce them to refer patient blood samples to BLS. From these referrals, BLS received tens of millions of dollars from private health insurance companies and Medicare.  Numerous physicians were bribed under the guise of lease, service, and/or consulting agreements. Under the lease and service agreements, between 2006 and 2009, physicians were frequently paid thousands of dollars a month by BLS for space in medical offices that BLS did not need or actually use and to perform routine blood drawing services that had little real dollar value.  Breihof and Dailey admitted today to using phony lease and service agreements to bribe physicians to send their patients’ blood samples to BLS. Breihof and Dailey also admitted that they paid various physicians a fee per test on behalf of BLS in order to induce those physicians to order more of the blood tests than they otherwise would have.

Breihof and Dailey each face a maximum potential penalty of five years in prison.  Each count also carries a maximum $250,000 fine, or twice the gross gain or loss from the offense.  In addition, Breihof has agreed to forfeit $1,179,556, and Dailey has agreed to forfeit $558,405. Sentencing for both defendants is scheduled for Sept. 19, 2013.

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 Tom O’Donnell; IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, and the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Maria Kelokates, with the investigation leading to today’s guilty pleas.

The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Melissa Jampol, and Deputy Chief Jacob T. Elberg 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.

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

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Defense counsel: Breihof: Henry Klingeman Esq., Newark
Dailey: Kevin G. Walsh Esq., Newark

Breihof, Peter Information
Dailey, William Information

CAMDEN, N.J. – A former Hudson County, N.J., resident admitted today that he defrauded an elderly woman of approximately $279,000 while she was hospitalized for cancer treatment, U.S. Attorney Paul J. Fishman announced.

Ralph Cozzino, 43, of North Bergen, N.J., pleaded guilty today before U.S. District Judge Robert B. Kugler in Camden federal court to Count One of the Indictment charging him with mail fraud.

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

Cozzino admitted to stealing stock certificates from the elderly victim’s apartment. Cozzino then presented the stolen stock certificates to the victim’s stock transfer agent, along with a fraudulent power of attorney bearing the victim’s name, address, Social Security number and forged signature, which purported to grant him control over the victim’s financial affairs, including the power to redeem and/or sell stock.

Cozzino instructed the stock transfer agent to transfer ownership of the stolen stocks into Cozzino’s name and to liquidate certain shares of stock for his benefit. Cozzino caused the stock transfer agent to send him the proceeds of the liquidated shares, which he deposited into bank accounts that he controlled and spent the funds on various personal expenditures, including a 2006 Nissan, Lasik eye surgery, as well as a down payment, closing costs, and furniture for a new house. From April 2006 until October 2007, Cozzino liquidated, and converted to his own use, approximately $279,000 in stolen shares belonging to the victim.

The mail fraud count to which Cozzino pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of $250,000. Sentencing is scheduled for Aug. 14, 2013.

U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge of the Newark Division Maria Kelokates, for the investigation leading to today’s guilty plea.

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

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Defense counsel: J. Michael Farrell Esq., Wenonah, N.J.

Cozzino Indictment

TRENTON, N.J. – An Ocean County, N.J., attorney admitted today to evading federal income taxes, after hiding assets in an attorney trust account in his wife’s name when he was already in debt to the IRS, U.S. Attorney Paul J. Fishman announced.

Lee Gottesman, 57, of Toms River, N.J., entered his guilty plea to two counts of the Indictment against him – federal income tax evasion and failing to pay payroll taxes for the employees of his law firm – before U.S. District Judge Freda L. Wolfson in Trenton federal court.

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

At the time he committed the crimes, Gottesman operated a law firm in Toms River, where he employed two other attorneys and a legal secretary. In 2002, the IRS filed a levy on Gottesman’s assets because of unpaid taxes. Gottesman then opened a sub-account, within his attorney trust account, in the name of his wife. His wife had never been a legal client of his.

Gottesman ran nearly all of his personal and business expenses through the account, closing all other business and personal accounts held in his name. His payments from the account included more than $90,000 in mortgage payments for his home; more than $17,000 in household expenses, including maintenance on his pool, landscaping services and construction costs; and thousands of dollars in other personal expenses, such as life insurance premiums, auto body repair work and personal credit card payments. The scheme allowed Gottesman to avoid paying personal income taxes on the hidden income.

Gottesman also withheld payroll and other taxes from his employees’ pay, but never filed the required forms or turned the withheld payments over to the IRS.

Gottesman specifically admitted he did not pay all his personal income taxes owed for 2006 or payroll taxes for 2009, but will be responsible for paying all taxes owed from 2006 to the present.

The tax evasion and payroll tax counts to which Gottesman pleaded guilty each carry a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Aug. 21, 2013.

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

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

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Defense counsel: Salvatore Alfano Esq., Bloomfield, N.J.

Gottesman, Lee Indictment

NEWARK, N.J. – A U.S. Army major surrendered to federal agents following his wife’s arrest at their Mount Holly, N.J., home this morning on charges that they abused their children through neglectful and cruel acts, including by breaking their bones, denying them medical attention, withholding water and force-feeding them hot sauce, U.S. Attorney Paul J. Fishman announced.

Carolyn Jackson, 35, and John E. Jackson, 37, formerly of the Picatinny Arsenal Installation in Morris County, N.J., are charged in a 17-count indictment with one count of conspiracy to endanger the welfare of a child, 13 counts of endangering the welfare of a child and three counts of assault.

The case falls under federal jurisdiction because the crimes were allegedly committed on a military base. The defendants are scheduled to appear this afternoon before U.S. Magistrate Judge Mark Falk in Newark federal court.

“Carolyn and John Jackson are charged with unimaginable cruelty to children they were trusted to protect, said U.S. Attorney Fishman. “The crimes alleged should not happen to any child, anywhere, and it is deeply disturbing that they would happen on a military installation. Along with the FBI, we will continue to seek justice for our communities' most vulnerable victims.”

According to the indictment unsealed today:

From approximately August 2005 until April 23, 2010, Carolyn and John Jackson conspired to engage in a constant course of neglect and cruelty towards three children they fostered and then adopted, one of whom died in May 2008. The Jacksons told their three biological children not to report the physical assaults to others, saying that the punishments and disciplinary techniques were justified, as they were “training” the adopted children how to behave.

After John Jackson was informed by a family friend that one of the children had revealed the abuse in the Jackson household, John Jackson reported the breach to Carolyn Jackson, who retaliated against that child with multiple beatings with a belt.

The Jacksons physically assaulted their children with various objects, causing two children to sustain fractured bones, for which the Jacksons failed to seek prompt medical attention.

They also withheld proper medical care for their adopted children, withheld sufficient nourishment and food for two of their children, withheld adequate water from two of their children, and, at times, prohibited them from drinking water altogether. The Jacksons even punished an adopted child they caught sneaking food or water, and required one of their biological children to prevent that child from drinking out of sinks and toilets.

As another form of punishment, Carolyn and John Jackson forced two of the children to consume food intended to cause them pain and suffering, variously including red pepper flakes, hot sauce and raw onion. They also caused one child to ingest excessive sodium or sodium-laden substances while being deprived of water, leading to a life-threatening condition.

All of the children are currently in the custody of the New Jersey Division of Child Protection and Permanency.

If convicted, Carolyn and John Jackson each face a maximum potential penalty of 10 years in prison on each of the 17 counts with which they are charged. 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, with the investigation leading to the charges. He also thanked the U.S. Army Criminal Investigation Command, under the command of Major General David E. Quantock and the Morris County Prosecutor’s Office, under the direction of Acting Prosecutor Fredric M. Knapp.

The government is represented by Assistant U.S. Attorneys Melissa L. Jampol and Elizabeth M. Harris of the U.S. Attorney’s Office Criminal Division in Newark.

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

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Defense counsel:

Carolyn Jackson: Rubin Sinins Esq., Springfield

John Jackson: Assistant Federal Public Defenders David Holman and Carol Gillen Esqs., Newark

Jackson, Carolyn and John Indictment

CAMDEN, N.J. – A former employee in the New Jersey offices of the Vacation Ownership Group LLC admitted today he conspired to defraud owners of timeshare properties by offering phony consulting services while also illegally collecting unemployment benefits, U.S. Attorney Paul J. Fishman announced.

Francis Santore, a/k/a “Frank Martin,” 53, of Northfield, N.J., pleaded guilty before U.S. District Judge Noel L. Hillman in Camden federal court to a Superseding Information charging him with one count of conspiracy to commit mail and wire fraud and one count of mail fraud.

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

The Vacation Ownership Group, a/k/a VO Group LLC, had offices in Mays Landing and Egg Harbor Township, N.J., and claimed to offer consulting services to owners of timeshares, including cancelling, purchasing and upgrading the timeshares.

Santore started working at the VO Group in October 2010, where he was alleged trained by a co-owner of the group, Adam Lacerda, to lie to customers using prepared scripts. Santore admitted that he would give customers the false impression that he was working for a bank or lending institution. He also admitted that he allowed customers to continue operating under the false impression given by his co-workers that the VO Group had the customer’s “complaint file” from a timeshare resort developer in front of them. Santore admitted that he regularly lied to customers in order to perpetrate the scam. Some of those customers then sent checks to the VO Group. Santore admitted that he falsely told a customer that if the customer paid $8,562 to the VO Group, the group would eliminate the customer’s approximately $18,000 mortgage debt with a timeshare developer. Santore admitted causing more than $70,000 in losses.

Santore also devised a separate scheme to defraud the California unemployment system by collecting $16,200 in unemployment compensation benefits while working at the VO Group.

On Jan. 23, 2013, co-owners Adam Lacerda and Ashley Lacerda and other members of the VO Group were variously charged in a Superseding Indictment with conspiracy to commit mail and wire fraud and other charges. Additional members of the VO Group were also charged by criminal Complaint in April 2012. As for the Lacerdas and other defendants who have not been convicted in this case, the charges and allegations against them are merely accusations and they are considered innocent unless and until proven guilty.

Each of the two counts to which Santore pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is currently scheduled for Sept. 13, 2013.

U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert Panella, New York Region, for their roles in the investigation leading to the guilty plea. He also thanked the state California’s Employment Development Department for its assistance.

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

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Defense counsel: Robert A. Mintz Esq., Newark

Santore, Frank Superseding Information

CAMDEN, N.J. – A south Jersey man who hid his father’s death from authorities to keep his Social Security payments admitted today to stealing more than $200,000 in retirement savings benefits paid out to the deceased, U.S. Attorney Paul J. Fishman announced.

Michael Shelton, 65, of Pennsauken, N.J., entered a guilty plea to an Information charging him with one count of theft of government funds, before Chief U.S. District Judge Jerome B. Simandle in Camden federal court.

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

Shelton admitted that when his father died in March of 1990, he intentionally did not notify the Social Security Administration (SSA), as he was obligated to do, so that he could continue to receive his father’s SSA retirement checks. The SSA discovered the death in June of 2012, at which time the deceased was receiving $977 in monthly retirement benefits.

After his father had died, Shelton set up a direct deposit for the checks into a PNC Bank account in his father’s name. Shelton acknowledged he accessed that account at various times and used the money to pay for personal expenses.

Shelton admitted that, from March 1990 to July 2012, he collected approximately $204,606 to which he was not entitled.

The charge to which Shelton pleaded guilty carries a maximum potential penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Sentencing is scheduled for Aug. 1, 2013.

U.S. Attorney Fishman credited special agents of the Social Security Administration Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan, with the investigation.

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

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Defense counsel: Assistant Federal Public Defender Thomas Young Esq., Camden

Shelton Information

TRENTON, N.J. – The senior vice president of operations of an independent wholesale food distributor admitted today to evading taxes on income he received from third parties, U.S. Attorney Paul J. Fishman announced.

John Annetta, 61, of Marlboro, N.J., pleaded guilty before U.S. District Judge Peter G. Sheridan to an Information charging him with one count of tax evasion.

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

Between approximately 2006 and 2011, Annetta worked at White Rose Food, an independent wholesale food distributor in the New York City and New Jersey metropolitan areas. During that time he was given $1,648,085 from two people met in the course of his employment. He failed to report this money as taxable income for the calendar years 2006, 2007, 2008, 2009, 2010, and 2011 in the amounts of $106,500, $234,000, $317,406, $398,542, $292,700 and $298,936, respectively. He admitted that for 2006 through 2011 he would have owed the government $536,530 if he had reported the additional cash on his income tax returns.

The charge to which Annetta pleaded guilty to is punishable by a maximum potential penalty of five years in prison and a fine of $250,000. Sentencing is scheduled for Sept. 4, 2013.

U.S. Attorney Fishman credited inspectors of the U.S. Postal Inspection Service, under the direction of Acting Postal Inspector in Charge Marie Kelokates, and 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 in Newark.

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Defense counsel: Matt D. Mandel Esq. of Millburn, N.J.

Annetta Information

NEWARK, N.J. - A Middlesex County, N.J. man made his initial appearance in federal court today following his arrest in connection with a bank robbery, U.S. Attorney Paul J. Fishman announced.

Jorge Rodriguez, 45, of South River, N.J., is charged by Complaint with one count of bank robbery. He appeared before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.

According to the Complaint:

On April 19, 2013, Rodriguez allegedly approached the customer counter at a TD Bank in Saddle Brook, brandishing what appeared to be a handgun in the direction of the teller. He handed the teller a paper shopping bag, and instructed the teller to put money into the bag, threatening to shoot the teller if she did not comply with his demands. At the time of the robbery, Rodriguez was wearing a baseball cap and glasses and had what appeared to be long hair and facial hair. Rodriguez was apprehended later that same day in a nearby residential neighborhood. Police recovered, among other things, cash, a BB pistol, the baseball cap, wig and fake facial hair, all allegedly worn by Rodriguez during the robbery.

If convicted on the bank robbery charge, Rodriguez 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.

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 the charge. He also thanked the Saddle Brook Police Department for their contribution to the case.

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

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Defense counsel: Donald J. McCauley Esq., Assistant Federal Public Defender, Newark

Rodriguez Complaint

TRENTON, N.J. – An insurance agent admitted today he evaded paying taxes related to income derived from his sale of insurance products from 2001 through 2005, U.S. Attorney Paul J. Fishman announced.

Ronald Patetta, 58, of Branchburg, N.J., pleaded guilty before U.S. District Judge Peter G. Sheridan to Count Three of the Indictment against him, which charged him with tax evasion.

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

From 2001 through 2005, Patetta worked as a licensed insurance agent and sold insurance products for a number of different insurance companies. Although the insurance companies paid Patetta wages and commissions in excess of nearly $900,000 during those years, Patetta did not pay any taxes on that income. In April 2007, Patetta filed for bankruptcy under Chapter 13 of the U.S. Bankruptcy Code. Patetta listed his assets and liabilities in his bankruptcy filing, including liabilities of approximately $440,000 for past taxes owed to the IRS.

Between July 2006 and October 2006, Patetta filed false income tax returns for the 2001 and 2005 tax years showing that he had earned no income for those years and owed no taxes. He also fabricated IRS-1099 forms purportedly from various insurance companies that he attached to his tax returns. These forms falsely showed that the insurance companies paid him no income for the years in question.

Patetta took steps to obstruct the IRS investigation. He sent letters and filed court papers challenging the legality of the IRS’ conduct, their legal authority to perform their jobs, and threatening them with legal action if they persisted. Patetta also sent “cease and desist” letters to the various insurance companies, threatening them with legal action if they complied with any IRS summonses requesting information concerning Patetta.

The charge to which Patetta pleaded guilty is punishable by a maximum potential penalty of five years in prison and a fine of $250,000. Sentencing is scheduled for Sept. 4, 2013.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation of the case.

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

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Defense counsel: Alain Leibman Esq., Lawrenceville, N.J.

Patetta Indictment

NEWARK, N.J. – A registered sex offender employed at a law office in Paterson, N.J., will appear in court today following his arrest at the office late yesterday after law enforcement officers discovered alleged child pornography on his work computer, U.S. Attorney Paul J. Fishman announced.

Kevin Rease, 32, of Hackettstown, N.J., is charged by Complaint with one count of distributing images of child sex abuse over the Internet. He is scheduled to appear this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.

According to the criminal Complaint:

On March 12, 2013, an undercover FBI agent downloaded images depicting child sexual abuse from an individual using an assumed name on a public Internet-based peer-to-peer file sharing network. The investigation revealed that the individual was logged on to the network using an Internet Protocol, or “IP,” address belonging to the law office where he worked.

The FBI executed a search warrant yesterday at the Paterson law office, seizing digital images depicting child sexual abuse, including material involving prepubescent minors. Rease’s work computer was logged onto the peer-to-peer network at the time, under the same assumed name which had offered illegal images for download on March 12.

As a previously convicted sex offender, Rease faces a mandatory minimum penalty of 15 years in prison, a maximum potential penalty of 40 years in prison, and a $250,000 fine if convicted of the offense.

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

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

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

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

Rease Complaint

NEWARK – Former Jersey City Council candidate Lori Serrano today admitted to converting federal funds illegally for her own use, U.S. Attorney Paul J. Fishman announced.

Serrano, 41, of Jersey City, N.J., pleaded guilty before U.S. District Judge Jose L. Linares to a Superseding Information charging her with converting to her own use and the use of another up to $1,000 in money of the United States to which she was not entitled.

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

Serrano, as a 2009 candidate for city council for Jersey City, had a duty truthfully to account to her campaign committee for contributions received and not to use committee funds for any improper purpose, such as for personal use. On March 30, 2009, and April 23, 2009, in Bayonne, N.J., Serrano accepted cash contributions from Solomon Dwek, who was cooperating with federal law enforcement agents. Serrano accepted those contributions with the intent to convert a portion of the money without the authority of the campaign committee. She applied up to $1,000 of that money to pay her own campaign expenses. The funds that Serrano admitted converting were federal funds given to Dwek by the FBI as part of the investigation.

The misdemeanor charge to which Serrano pleaded guilty carries a maximum potential penalty of one year in prison and a $100,000 fine. Serrano had been facing a mail fraud charge, which, according to the plea agreement, will be dismissed at the time of her sentencing. Sentencing is scheduled for Aug. 1, 2013.

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 Eric W. Moran of the U.S. Attorney’s Office Special Prosecutions Division.

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Defense counsel: Raymond L. Hamlin Esq., Newark

Serrano Superseding Information

NEWARK, N.J. – Two Essex County, N.J., men today admitted their roles in the armed robbery of the Golden Palace jewelry store in Orange, N.J., U.S. Attorney Paul J. Fishman announced.
              
Antonio Moore, 44, of Newark, pleaded guilty to an Indictment charging him with one count of Hobbs Act robbery and one count of using a firearm in furtherance of that robbery. Charles Madison, 41, also of Newark, pleaded guilty to an Information charging him with aiding and abetting the Hobbs Act robbery and for being a felon in possession of a firearm. Both pleaded before U.S. District Judge William J. Martini in Newark federal court. A third defendant, David Williams, pleaded guilty in January 2013.

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

On August 6, 2012, Moore and Williams robbed the store at gunpoint, while Madison served as the getaway driver. During the robbery, Moore punched a 22-year-old employee of the Golden Palace in the head, restrained her and a co-worker with duct tape and telephone cord, and then took approximately $120,000 in jewelry from the store’s display cases. The three defendants were pulled over in Madison’s pick-up truck approximately an hour after the robbery, at which time law enforcement found dozens of pieces of gold jewelry scattered across the back seat of the truck.

Moore faces a maximum potential punishment of life imprisonment. Madison faces a maximum potential punishment of 20 years in prison on the robbery charge and 10 years in prison on the gun charge. Both defendants are subject to fines of up to $250,000. Sentencing is scheduled for July 31, 2013.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty pleas.  Mr. Fishman also thanked the Orange Police Department and the New Jersey State Police for their investigation and assistance on this case.

The government is represented by Assistant U.S. Attorney Andrew J. Bruck of the U.S. Attorney’s Office General Crimes Unit, and David E. Malagold, Chief of the Office’s Organized Crime/Gangs Unit, in Newark.

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Defense counsel: Moore: Mark A. Berman Esq., River Edge, N.J.
Madison: Michael V. Calabro Esq., Newark

Moore, Antonio et. al. Indictment
Madison, Charles Information

CAMDEN, N.J. – A former employee in the New Jersey offices of the Vacation Ownership Group LLC admitted today to conspiring to defraud owners of timeshare properties by offering phony consulting services while also illegally collecting unemployment benefits, U.S. Attorney Paul J. Fishman announced.

Brian Corley, a/k/a “John Corley,” 28, of Little River, S.C., and formerly of Egg Harbor, N.J., pleaded guilty before U.S. District Judge Noel L. Hillman in Camden federal court to an Information charging him with one count of conspiracy to commit mail and wire fraud and one count of mail fraud.

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

The Vacation Ownership Group, a/k/a VO Group LLC, had offices in Mays Landing and Egg Harbor Township, N.J., and claimed to offer consulting services to owners of timeshares, including cancelling, purchasing and upgrading the timeshares.

Corley started working at the VO Group in March 2010, where he was trained by a co-owner of the group, Adam Lacerda, to call customers using prepared scripts. Corley admitted that he would call customers and give them the false impression that he was working for a bank or lending institution, claiming he had the customer’s “complaint file” from a timeshare resort developer in front of him. Corley admitted that he regularly lied to customers in order to perpetrate the scam. Some of those customers then sent checks to the VO Group. The scheme caused more than $200,000 in losses.

Among other things, Corley admitted that he falsely told a customer that if the customer paid $25,000 to the VO Group and exchanged timeshare points, the group would eliminate the customer’s approximately $95,000 mortgage debt with a timeshare developer.

Corley also devised a separate scheme to defraud the New Jersey Department of Labor by collecting unemployment compensation benefits while working at the VO Group. He admitted to applying for and collecting unemployment compensation benefits to which he was not entitled. Court documents show Corley illegally received $16,936 as a result.

On Jan. 23, 2013, co-owners Adam Lacerda and Ashley Lacerda and other members of the VO Group were variously charged in a superseding Indictment with conspiracy to commit mail and wire fraud and other charges. Additional members of the VO Group were also charged by criminal Complaint in April 2012. As for the Lacerdas and other defendants who have not been convicted in this case, the charges and allegations against them are merely accusations and they are considered innocent unless and until proven guilty.

Each of the two counts to which Corley pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is currently scheduled for July 29, 2013.

U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert Panella, New York Region, for their roles in the investigation leading to the guilty plea. He also thanked the N.J. Department of Labor, Benefit Payment Control Unit, for its assistance.

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

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Defense counsel:  José L. Ongay Esq., Camden

Corley, Brian Superseding Information

NEWARK, N.J. – The owner of Autotron Systems Inc., an auto repair shop that provided auto repair services to numerous government agencies, admitted today that he paid bribes to a federal agent in exchange for the agent’s assistance in referring government business to Autotron and expediting and inflating payments, U.S. Attorney Paul J. Fishman announced.

Taras Maczaj, 66, of New York, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an Information charging him with one count of bribing a federal agent then employed as a supervisory special agent with the U.S. Department of Homeland Security (DHS) Immigration and Customs Enforcement (ICE) in New York.

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

Maczaj was the president and chief executive officer of Autotron, which provided, among other things, vehicle repairs and upgrades to government-owned vehicles, including vehicles owned by DHS and ICE.

From as early as May 2007 to February 2011, Maczaj purchased multiple gift cards to be used as bribe payments. During that time, he gave more than $10,000 in gifts cards to the agent, including at locations in New Jersey.

Maczaj admitted he provided the gift cards to the agent in exchange for the agent’s referral of all government-owned vehicles under the agent’s control that needed repairs, maintenance or other work; expediting the payment of Autotron’s invoices; and approving invoices that contained fraudulent or inflated charges for services Autotron purportedly performed on the vehicles.

The count to which Maczaj pleaded guilty carries a maximum potential penalty of 15 years in prison and a $250,000 fine. Sentencing is scheduled for Sept. 4, 2013.

U.S. Attorney Fishman credited special agents of DHS, Office of Professional Responsibility, under the direction of Special Agent in Charge, Northeast, Terence Opiola; the DHS, Office of Inspector General, Northeast, under the direction of Gregory K. Null; special agents of the U.S. Department of Justice Office of the Inspector General, under the direction of Acting Special Agent in Charge Michael P. Tompkins; and ICE, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees, for the investigation leading to today’s guilty plea.

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

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Maczaj Information

NEWARK, N.J. – Two New Jersey men convicted for conspiring to travel to Somalia to join a terrorist group and murder individuals whose beliefs and practices did not align with their extremist ideology were sentenced today to 22 and 20 years in prison, respectively, New Jersey U.S. Attorney Paul J. Fishman announced.

Mohamed Hamoud Alessa, 23, of North Bergen, who was sentenced to 264 months in prison, and Carlos Eduardo Almonte, a/k/a “Omar,” 27, of Elmwood Park, who was sentenced to 240 months in prison, previously pleaded guilty to one count of conspiring to murder persons outside the United States on behalf of designated Foreign Terrorist Organization Al Shabaab. The defendants entered their guilty pleas before U.S. District Judge Dickinson R. Debevoise, who also imposed the sentences today in Newark federal court.

On June 5, 2010, Alessa and Almonte were taken into custody by pre-staged arrest teams as they attempted to board separate international flights at JFK International Airport. They have been held in continuous custody since their arrests by order of U.S. Magistrate Judge Madeline Cox Arleo.

“Alessa and Almonte wanted to join terrorists who shared their violent, extremist ideology so they could murder those who did not,” said U.S. Attorney Fishman. “We need not speculate about their intentions: their own words confirm the deadly mission for which they trained, planned and attempted to embark. Their decades-long sentences are both a just punishment for their admitted actions and a warning to others who would be tempted down this dead-end path.”

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

Alessa and Almonte admitted that they planned to travel outside the United States to join Al Shabaab, an international terrorist group based in Somalia, knowing the group was engaged in carrying out violent attacks against individuals in that country – including members of the Transitional Federal Government of Somalia and African Union soldiers. As part of this campaign, Al Shabaab has conducted military assaults, bombings and other violent acts, and has attempted through its media operations to recruit foreigners – including Americans and other westerners – to join its ranks.

In October 2006, the FBI received a tip concerning the defendants’ activities. As the investigation continued, an NYPD Intelligence Division undercover officer recorded numerous meetings and conversations with them, during which the defendants discussed and prepared to carry out their plan.

The defendants admitted that those preparations included: saving and pooling thousands of dollars; physically conditioning themselves by, among other things, lifting weights and running; engaging in combat simulations using paintball guns, computer software and other items; acquiring tactical clothing, hydration systems and other equipment; and purchasing airline tickets to Egypt with the intent to then travel to Somalia. They also admitted that as part of their plan, Alessa and Almonte had traveled to Jordan in February 2007 and while there, inquired about opportunities to meet with groups committed to establishing Islamic law through violence.

Additionally, Alessa and Almonte admitted that they acquired, viewed and displayed for others audio, video and written materials – produced by and relating to Al Qaeda, Al Shabaab and other extremist groups – which advocated, depicted and/or sought to justify the killing of individuals who opposed them, including civilians.

In addition to the prison terms, Judge Debevoise sentenced Alessa and Almonte to lifetime terms of supervised release.

U.S. Attorney Fishman praised the outstanding work of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the Newark Joint Terrorism Task Force (JTTF); the New York City Police Department, under the direction of Commissioner Raymond W. Kelly; and the State of New Jersey Office of Homeland Security and Preparedness, under Director Edward Dickson, in conducting the investigation leading to today’s sentences. The JTTF is made up of agents and officers of the U.S. Department of Homeland Security’s Immigration and Customs Enforcement, Homeland Security Investigations; the U.S. Department of Homeland Security’s Customs and Border Protection; the U.S. Department of State; the New Jersey State Police; the Jersey City Police Department; the Bayonne Police Department; the Port Authority of New York and New Jersey Police Department; and other law enforcement agencies.

The government is represented by Chief Andrew Kogan and Assistant U.S. Attorney L. Judson Welle of the U.S. Attorney’s Office National Security Unit, and Alamdar S. Hamdani, Deputy Chief, Counterterrorism Section of the Justice Department’s National Security Division.

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Defense counsel: Alessa: Stanley L. Cohen Esq., New York
Almonte: James Patton Esq., Livingston, N.J.

NEWARK, N.J. – A Newark man was sentenced today to 55 months in prison for his role in a carjacking on March 14, 2012, U.S. Attorney Paul J. Fishman announced.

Anthony Reynolds, 18, previously pleaded guilty before U.S. District Judge Dennis M. Cavanaugh in Newark federal court to an Information charging him with one count of theft of a motor vehicle by force, violence and intimidation.

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

Reynolds admitted that on March 14, 2012, he was a passenger in a BMW that had stopped at an intersection in Newark. Reynolds exited the vehicle and approached the driver’s side of a Porsche 911 Turbo that was stopped behind the BMW. Reynolds brandished a .38-cal. revolver at the driver of the Porsche 911 Turbo and ordered the driver out of the car. Once the driver got out of the car, Reynolds attempted to drive away in the Porsche 911 Turbo, but was unable to operate its manual transmission. A police chase ensued on foot and the police apprehended Reynolds.

In addition to the prison term, Judge Cavanaugh sentenced Reynolds to three years of supervised release.

U.S. Attorney Fishman credited special agents with the FBI, under the direction of Acting Special Agent in Charge David Velazquez in Newark, with the investigation leading to today’s sentencing.

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

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Defense counsel: Joseph Ferrante Esq., Newark

PHILADELPHIA – An heir to the Scripps Media fortune was convicted today by a federal jury in Philadelphia for embezzling $3.6 million from members of his family to fund his lavish lifestyle, New Jersey U.S. Attorney Paul J. Fishman announced.

Michael Scripps, 36, of Detroit, was convicted of all seven counts of wire fraud in the Indictment against him in the third day of jury deliberations following a one and a half week trial. The case was prosecuted in Philadelphia by Assistant U.S. Attorneys from the U.S. Attorney’s Office for the Eastern District of Pennsylvania, supervised by the U.S. Attorney’s Office for the District of New Jersey as the former office was recused from the case.

According to the evidence at trial:

From November 2001 through October 2006, Michael Scripps persuaded his uncle and mother to transfer millions of dollars in trust funds to the Merrill Lynch Trust Co. and brokerage firm. With the assistance of Richard Gleeson, then a Merrill Lynch financial advisor in Media, Pa., Scripps used fraudulent authorizations to transfer his uncle’s and mother’s money to his own account at Merrill Lynch, resulting in $3.6 million in losses.

Gleeson awaits sentencing, having pleaded guilty to two counts of wire fraud for his participation in the scheme and testified at trial.

The jury heard testimony that Scripps used some of the ill-gotten gains to lead a playboy lifestyle, including by purchasing expensive jewelry including Tiffany earrings, a diamond ring, and Cartier necklace. He also used some of the stolen money to purchase a car for his girlfriend, four properties in New Orleans and for luxury travel across the U.S.

Each count of wire fraud carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for July 15, 2013. Scripps could also be ordered to pay restitution to his victims as part of his sentence.

U.S. Attorney Fishman credited special agents of the Philadelphia FBI, Newtown Square Resident Agency, under the direction of Special Agent in Charge Edward J. Hanko, with the investigation leading to today’s conviction.

The government is represented by Assistant U.S. Attorneys Terri Marinari and L.C. Wright of the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

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Defense counsel: Mark Durant Esq., Philadelphia; Paul W. Broschay Esq. and Michael R. Dezsi Esq., Detroit

NEWARK, N.J. – A North Carolina man today admitted his role in one of the nation’s largest and longest running stolen identity refund fraud schemes ever prosecuted, U.S. Attorney Paul J. Fishman announced.

Luis Martinez, 48, of Matthews, N.C., pleaded guilty today before U.S. District Judge Claire C. Cecchi, to an Information charging him with conspiracy to defraud the United States and theft of government property. The conspiracy caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds and resulted in losses to the United States of more than $12 million.

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

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

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

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

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

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

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

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

U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen; the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Marie Kelokates; the U.S. Secret Service, under the direction of Special Agent In Charge James Mottola; and the Drug Enforcement Administration, under the direction of Acting Special Agent in Charge Robert G. Koval, for the investigation leading to today’s guilty plea.

The conspiracy count carries a maximum potential penalty of five years in prison and up to a $250,000 fine. The substantive count of theft of government property carries a maximum potential penalty of 10 years in prison and up to a $250,000 fine. Sentencing is scheduled for July 16, 2013.

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

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Defense counsel: Barry Goldberg Esq., New York

Martinez, Luis Information

TRENTON, N.J. — A Pennsylvania man today admitted robbing two banks, one in New Jersey and one in Pennsylvania, in October 2011, U.S. Attorney Paul J. Fishman announced.

Odel Taitt, 33, of Denver, Pa., pleaded guilty before U.S. District Judge Mary L. Cooper to an Information charging him with two counts of bank robbery.

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

Taitt admitted that on Oct. 6, 2011, he robbed the National Penn Bank in Wyomissing, Pa., wearing sunglasses and a baseball cap. He presented the teller with a note demanding money and stating that he had a gun. The teller complied with Taitt’s demands and Taitt fled the bank.

He also admitted that on Oct. 25, 2011, he entered the PNC Bank in Tewksbury Township, N.J., wearing sunglasses and a gray, derby hat. He presented the teller with a note that asked for $20, $50 and $100 bills and again threatened that he had a gun. He received the money and fled the bank. Taitt was apprehended later that day in Hunterdon County.

The charges to which Taitt pleaded guilty are each punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for July 16, 2013. Taitt is in federal custody pending sentencing.

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 the Hunterdon County Prosecutor’s Office, under the direction of Prosecutor Anthony P. Kearns, III; the Union County Prosecutor’s Office, under the direction of Prosecutor Theodore J. Romankow; the Tewksbury Township Police Department, under the direction of Chief Thomas Holmes; the New Providence Police Department, under the direction of Chief Anthony D. Buccelli, Jr.; the Bernards Township Police Department, under the direction of Chief Brian Bobowicz; and the Wyomissing Police Department, under the direction of Chief Jeffrey R. Biehl, for their contributions to the case.

The government is represented by Deputy U.S. Attorney Nelson S.T. Thayer Jr. in Camden and Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton.

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Defense counsel: Andrea Bergman Esq. Trenton

Taitt Information

TRENTON, N.J. – A former mortgage broker and bank officer today admitted his role in conspiring to commit bank fraud in order to secure a $1.48 million residential real estate loan, U.S. Attorney Paul J. Fishman announced.

James Cockinos, 58, of Englewood Cliffs, N.J., pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an Information charging him with one count of conspiracy to commit bank fraud. Cockinos defrauded Washington Mutual Bank (later acquired by JPMorgan Chase) in New York, for the purpose of securing a $1.48 million residential loan.

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

Cockinos was the owner/president of Federated Mortgage Company of America (“FMCA”). He was also a member of the Board of Directors at Mariner’s Bank. Cockinos, through FMCA, served as the mortgage broker on a residential loan with Washington Mutual Bank, F.A., in an application dated April 19, 2007. The borrower, identified as Individual 2 in the Complaint, applied for the loan at the request of a spouse identified as Individual 1 in the Complaint. There was no co-borrower on the loan.

The loan was for the purpose of purchasing for $1.9 million a property located in Englewood Cliffs. Cockinos was responsible for obtaining certain information from Individual 2 for purposes of completing the loan application. At the time that Individual 2 signed the loan application, Individual 2 did not review the contents of the application, which included information regarding the purpose of the property and Individual 2’s employment, income, and assets.

The application contained false statements concerning Individuals 2’s employment, income and assets. Cockinos also indicated in the application that he obtained the information from Individual 2 through a face-to-face interview, when in fact, no such interview took place.

The application indicated that Individual 2 had $400,000 in a joint checking account at Mariner’s Bank in New Jersey, when, in fact, Cockinos and Individual 1 caused $350,000 to be temporarily deposited into the joint account for the purpose of misrepresenting that amount as Individual 2’s assets. Cockinos also directed a Mariner’s Bank employee to falsely verify that there was $350,000 in the joint account for the prior two months, when in fact, there were significantly less funds in the account over the prior two months.

Washington Mutual ultimately approved a loan of $1.48 million and wired the loan amount to Individual 2’s closing attorney on June 17, 2007. On Sept. 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank. Between Nov. 2, 2010, and Jan. 10, 2011, Individual 2 defaulted on the loan. JP Morgan initiated foreclosure proceedings. The Englewood Cliffs property was sold on March 16, 2012, leaving JPMorgan Chase with a loss of more than $500,000 on the defaulted loan.                                          

The bank fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a maximum fine of $1 million. Sentencing is scheduled for July 23, 2013.                    

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent In Charge Aaron T. Ford in Newark; special agents of the Federal Deposit Insurance Corp., under the direction of Special Agent in Charge of the Northeast Region A. Derek Evans; and criminal investigators from the U.S. Attorney’s Office in Newark, with the investigation leading to today’s guilty plea.

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

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Defense counsel: Edward J. Plaza Esq., Newark

Cockinos, James Information

CAMDEN, N.J. – A former employee of The Vacation Ownership Group LLC admitted today to conspiring to defraud owners of timeshare properties, U.S. Attorney Paul J. Fishman announced.

Alfred Giordano, a/k/a “Alex Jordan,” 33. of Myrtle Beach, S.C., pleaded guilty before U.S. District Court Judge Noel L. Hillman in Camden federal court to an Information charging him with one count of conspiracy to commit mail and wire fraud and one count of mail fraud.

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

The Vacation Ownership Group, a/k/a VO Group LLC (the “VO Group”), purported to offer consulting services to owners of timeshares, including timeshare cancellation services. In March 2010, Alfred Giordano started working at the VO Group and was trained by Adam Lacerda to call customers using prepared scripts. Giordano would call customers and give them the false impression that he was working for a bank or lending institution and that he had the customer’s “complaint file” in front of him. After hearing Giordano’s false representations, some customers sent checks to the VO Group. Giordano admitted to causing over $120,000 in losses.

Giordano also admitted to devising a separate scheme to defraud the New Jersey Department of Labor by collecting unemployment compensation benefits while working at the VO Group. Giordano admitted to applying for and collecting $13,676 in unemployment compensation benefits to which he was not entitled.

Two weeks ago, Alfred Giordano’s brother – another former VO Group employee – pleaded guilty to an Information charging him with his role in the fraudulent scheme. On March 27, 2013, Vincent Giordano, 28, of Atlantic county (using the same “Alex Jordan” alias as his brother) pleaded guilty before Judge Hillman to conspiracy to commit mail and wire fraud.

On Jan. 23, 2013, co-owners Adam Lacerda and Ashley Lacerda and other members of the VO Group were charged in a Superseding Indictment with conspiracy to commit mail and wire fraud and other charges. Additional members of the VO Group were also charged by Criminal Complaint in April 2012.

The mail and wire fraud conspiracy charge to which Alfred Giordano pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. The mail fraud charge to which Alfred Giordano pleaded guilty is also punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is currently scheduled for Jul 22, 2013.

The mail and wire fraud conspiracy to which Vincent Giordano pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. His sentencing is scheduled for July 1, 2013, at 11:30 a.m.

U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident
Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert Panella, New York Region, for their roles in the investigation leading to these guilty pleas. He also thanked the N.J. Department of Labor, Benefit Payment Control Unit, for its assistance.

The government is represented by Assistant U.S. Attorneys Alyson M. Oswald and R. David Walk, Jr. of the U.S. Attorney’s Office Criminal Division in Camden.

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Defense counsel: Alfred Giordano: Martin I. Isenberg Esq., Gibbsboro, N.J.
Vincent Giordano: Paul A. Sarmousakis Esq., Avalon, N.J.

Giordano Superseding Information

NEWARK, N.J. – An Essex County, N.J., man today admitted his role in a scheme to illegally obtain and use duplicate credit cards, U.S. Attorney Paul J. Fishman announced.

Abdullah Bryant, 34, of Irvington, pleaded guilty before U.S. District Judge Dennis Cavanaugh to Count One of an Indictment charging him with bank fraud. Under the terms of the plea, the remaining four counts of aggravated identity theft and four counts of credit card fraud are dismissed.

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

Bryant and others got JP Morgan Chase Bank to issue and send, via UPS, 21 duplicate credit cards based on phone calls from persons purporting to be the credit card holders.  The callers falsely represented that they were Chase Bank credit card account holders who needed replacement cards and requested that the cards be shipped to addresses different from those appearing on Chase's records.

Between Sept. 16, 2011, and Sept. 25, 2011, Bryant unlawfully obtained and used four credit cards issued by Chase Bank, making and attempting to make purchases totaling approximately $60,000. The purchases consisted primarily of luxury items such as jewelry and expensive electronic equipment such as computers, as well as 3D and HD television sets.  The aggravated identity theft charges are based on defendant Bryant’s use of the identities of the four true account holders as he used the card.

The bank fraud charge is punishable by a maximum potential penalty of 30 years in prison and a $1 millionfine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Aug. 5, 2013.

U.S. Attorney Fishman credited special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola, and the Essex County Sheriff’s Office, under the direction of Sheriff Armando B. Fontoura, with the investigation leading to today’s guilty plea.

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

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Defense counsel: Dennis Cleary Esq., Newark

Bryant, Abdullah Indictment

NEWARK, N.J. – A well-known cardiologist and the founder, CEO, and sole owner of a pair of large medical services companies in New Jersey and New York admitted today to conspiring in a multimillion-dollar health care fraud scheme that subjected thousands of patients to unnecessary tests and potentially life-threatening, unneeded treatment, as well as treatment by unlicensed or untrained personnel. The guilty plea was announced today by New Jersey U.S. Attorney Paul J. Fishman.

Jose Katz, 68, of Closter, N.J., pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an Information charging him with one count of conspiracy to commit health care fraud and one count of Social Security fraud arising from a separate scheme to give his wife a “no show” job and make her eligible for Social Security benefits.

As part of his plea agreement with the government, Katz agreed that the loss amount sustained by Medicare, Medicaid and other insurers victimized by the fraudulent billings was $19 million. U.S. Department of Health and Human Services, Office of Inspector General and FBI records indicate the loss amount suffered by the victims is the largest recorded in New Jersey, New York and Connecticut for an individual practitioner convicted of health care fraud.

“After years of prominence in his field, Jose Katz will now be remembered for his record-setting fraud,” said U.S. Attorney Fishman. “Katz was so focused on illegal profits that he directed unlicensed and unqualified providers to treat his patients, ordered unnecessary tests and cavalierly ordered treatments that could have caused patient harm. Ripping off the government and insurance companies is bad enough; risking patient health in the bargain is inexcusable.”

“Health care fraud is not a victimless crime. It is a plague on American society and could put the health of people who need medical care at risk, said FBI Special Agent in Charge Aaron T. Ford. “The FBI, together with its law enforcement and regulatory agency partners, will vigorously investigate these crimes and hold those responsible accountable.”

“I am proud to be part of the federal team that brought Dr. Katz to justice after a complicated investigation,” said Tom O’Donnell, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Regional Office. Dr. Katz had very little regard for his patients and the Medicare program, as evidenced by his blatant behavior. Criminals can be assured that if they attempt to defraud Medicare and their patients, they will be brought to justice.”

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

Katz was the founder, CEO, and sole equity-holder of Cardio-Med Services LLC (Cardio-Med), and Comprehensive Healthcare & Medical Services LLC (Comprehensive Healthcare). From 2004 through 2012, Cardio-Med had offices in Union City, Paterson, and West New York, N.J., and Comprehensive Healthcare had offices in Manhattan and Queens, New York. Both Cardio-Med and Comprehensive Healthcare provided cardiology, internal medicine and other medical services to individual patients. During that time period, Katz conspired to bill Medicare Part B, Medicaid, Empire BCBS, Aetna and others for unnecessary tests and unnecessary procedures based on false diagnoses, and for medical services rendered by unlicensed practitioners.

Between July 2006 and February, 2009, Katz spent more than $6 million for advertising on Spanish-language television and radio stations. The ads attracted hundreds of patients to Cardio-Med and Comprehensive Healthcare every day. Overall, Katz was able to bill Medicare and Medicaid more than $70 million for his services from 2005 through 2012.

Over the course of the conspiracy, Katz ordered and performed essentially the same battery of diagnostic tests for nearly all the patients he treated, regardless of their symptoms. Katz also instructed his non-physician employees to order and perform diagnostic tests for patients of other doctors working at his offices, even though he had not examined those patients and the other physicians had not ordered the unnecessary tests.

Most significantly, Katz admitted that he falsified patient charts with fictitious and boilerplate symptoms and falsely diagnosed a majority of his Medicare and Medicaid patients with coronary artery disease and debilitating and inoperable angina. He also admitted to making the diagnoses to justify prescribing and administering an unnecessary treatment for those patients called enhanced external counter pulsation, or EECP. Katz even prescribed EECP treatments for some patients with contraindications for the treatment, therefore subjecting those patients to a substantial risk of serious injury or death.

From 2005 through 2012, Medicare and Medicaid paid Katz more than $15.6 million just for his EECP treatments, most of which were fraudulent.

In addition, Katz ordered conspirator Mario Roncal, 62, of Woodland Park, N.J. – who had a medical degree from San Juan Bautista School of Medicine in San Juan, Puerto Rico, but did not have a license to practice medicine in any of the 50 states – to treat patients, knowing he was not licensed. At Katz’s direction, Roncal held himself out to fellow employees and to patients as “Dr. Roncal,” examined new patients as well as Katz’s follow-up patients, ordered diagnostic tests, diagnosed patients with medical conditions and diseases and recommended and prescribed courses of treatment and surgery – including falsely diagnosing patients with angina and prescribing EECP treatments for those patients.

To conceal this illegal and unlicensed practice of medicine, Roncal forged Katz’s signature on paperwork associated with Roncal’s unlawful medical services, including on patient charts. During the conspiracy, Katz used his own billing numbers to bill Medicare Part B and Medicaid for the illegal services Roncal provided as though they were provided by Katz.

Roncal was indicted on March 2, 2012, for conspiracy to commit health care fraud. He entered a guilty plea on Jan. 4, 2013 and awaits sentencing.

Katz also admitted to a Social Security fraud scheme in which, from 2005 through 2012, he kept his wife on Cardio-Med’s payroll though she performed little or no work. During the course of the scheme, Katz sent false W-2 forms for calendar years 2005 through 2011 to the U.S. Social Security Administration purportedly reflecting $1,251,604 in earnings for his wife, making her eligible for an estimated $263,000 in Social Security benefits to which she was not entitled.

The health care fraud conspiracy and fraud counts with which Katz is charged carry a maximum potential penalty of 10 and five years in prison, respectively. Each count also carries a maximum $250,000 fine, or twice the gross gain or loss from the offense. At sentencing, currently scheduled before Judge Linares on July 23, 2013, Katz will also be ordered to pay restitution to victims of his offenses. Katz was granted $200,000 bail pending sentencing.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge O’Donnell; the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Maria Kelokates; the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen; and criminal and civil investigators with the U.S. Attorney’s Office for the investigation leading to the guilty plea.

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

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Defense counsel: Blair R. Zwillman Esq., Parsippany, N.J.
                                    Joseph A. Hayden Jr., Esq.; Roseland, N.J.

Katz Information

NEWARK, N.J. – A well-known cardiologist and the founder, CEO, and sole owner of a pair of large medical services companies in New Jersey and New York admitted today to conspiring in a multimillion-dollar health care fraud scheme that subjected thousands of patients to unnecessary tests and potentially life-threatening, unneeded treatment, as well as treatment by unlicensed or untrained personnel. The guilty plea was announced today by New Jersey U.S. Attorney Paul J. Fishman.

Jose Katz, 68, of Closter, N.J., pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an Information charging him with one count of conspiracy to commit health care fraud and one count of Social Security fraud arising from a separate scheme to give his wife a “no show” job and make her eligible for Social Security benefits.

As part of his plea agreement with the government, Katz agreed that the loss amount sustained by Medicare, Medicaid and other insurers victimized by the fraudulent billings was $19 million. U.S. Department of Health and Human Services, Office of Inspector General and FBI records indicate the loss amount suffered by the victims is the largest recorded in New Jersey, New York and Connecticut for an individual practitioner convicted of health care fraud.

“After years of prominence in his field, Jose Katz will now be remembered for his record-setting fraud,” said U.S. Attorney Fishman. “Katz was so focused on illegal profits that he directed unlicensed and unqualified providers to treat his patients, ordered unnecessary tests and cavalierly ordered treatments that could have caused patient harm. Ripping off the government and insurance companies is bad enough; risking patient health in the bargain is inexcusable.”

“Health care fraud is not a victimless crime. It is a plague on American society and could put the health of people who need medical care at risk, said FBI Special Agent in Charge Aaron T. Ford. “The FBI, together with its law enforcement and regulatory agency partners, will vigorously investigate these crimes and hold those responsible accountable.”

“I am proud to be part of the federal team that brought Dr. Katz to justice after a complicated investigation,” said Tom O’Donnell, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Regional Office. Dr. Katz had very little regard for his patients and the Medicare program, as evidenced by his blatant behavior. Criminals can be assured that if they attempt to defraud Medicare and their patients, they will be brought to justice.”

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

Katz was the founder, CEO, and sole equity-holder of Cardio-Med Services LLC (Cardio-Med), and Comprehensive Healthcare & Medical Services LLC (Comprehensive Healthcare). From 2004 through 2012, Cardio-Med had offices in Union City, Paterson, and West New York, N.J., and Comprehensive Healthcare had offices in Manhattan and Queens, New York. Both Cardio-Med and Comprehensive Healthcare provided cardiology, internal medicine and other medical services to individual patients. During that time period, Katz conspired to bill Medicare Part B, Medicaid, Empire BCBS, Aetna and others for unnecessary tests and unnecessary procedures based on false diagnoses, and for medical services rendered by unlicensed practitioners.

Between July 2006 and February, 2009, Katz spent more than $6 million for advertising on Spanish-language television and radio stations. The ads attracted hundreds of patients to Cardio-Med and Comprehensive Healthcare every day. Overall, Katz was able to bill Medicare and Medicaid more than $70 million for his services from 2005 through 2012.

Over the course of the conspiracy, Katz ordered and performed essentially the same battery of diagnostic tests for nearly all the patients he treated, regardless of their symptoms. Katz also instructed his non-physician employees to order and perform diagnostic tests for patients of other doctors working at his offices, even though he had not examined those patients and the other physicians had not ordered the unnecessary tests.

Most significantly, Katz admitted that he falsified patient charts with fictitious and boilerplate symptoms and falsely diagnosed a majority of his Medicare and Medicaid patients with coronary artery disease and debilitating and inoperable angina. He also admitted to making the diagnoses to justify prescribing and administering an unnecessary treatment for those patients called enhanced external counter pulsation, or EECP. Katz even prescribed EECP treatments for some patients with contraindications for the treatment, therefore subjecting those patients to a substantial risk of serious injury or death.

From 2005 through 2012, Medicare and Medicaid paid Katz more than $15.6 million just for his EECP treatments, most of which were fraudulent.

In addition, Katz ordered conspirator Mario Roncal, 62, of Woodland Park, N.J. – who had a medical degree from San Juan Bautista School of Medicine in San Juan, Puerto Rico, but did not have a license to practice medicine in any of the 50 states – to treat patients, knowing he was not licensed. At Katz’s direction, Roncal held himself out to fellow employees and to patients as “Dr. Roncal,” examined new patients as well as Katz’s follow-up patients, ordered diagnostic tests, diagnosed patients with medical conditions and diseases and recommended and prescribed courses of treatment and surgery – including falsely diagnosing patients with angina and prescribing EECP treatments for those patients.

To conceal this illegal and unlicensed practice of medicine, Roncal forged Katz’s signature on paperwork associated with Roncal’s unlawful medical services, including on patient charts. During the conspiracy, Katz used his own billing numbers to bill Medicare Part B and Medicaid for the illegal services Roncal provided as though they were provided by Katz.

Roncal was indicted on March 2, 2012, for conspiracy to commit health care fraud. He entered a guilty plea on Jan. 4, 2013 and awaits sentencing.

Katz also admitted to a Social Security fraud scheme in which, from 2005 through 2012, he kept his wife on Cardio-Med’s payroll though she performed little or no work. During the course of the scheme, Katz sent false W-2 forms for calendar years 2005 through 2011 to the U.S. Social Security Administration purportedly reflecting $1,251,604 in earnings for his wife, making her eligible for an estimated $263,000 in Social Security benefits to which she was not entitled.

The health care fraud conspiracy and fraud counts with which Katz is charged carry a maximum potential penalty of 10 and five years in prison, respectively. Each count also carries a maximum $250,000 fine, or twice the gross gain or loss from the offense. At sentencing, currently scheduled before Judge Linares on July 23, 2013, Katz will also be ordered to pay restitution to victims of his offenses. Katz was granted $200,000 bail pending sentencing.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge O’Donnell; the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Maria Kelokates; the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen; and criminal and civil investigators with the U.S. Attorney’s Office for the investigation leading to the guilty plea. He also thanked the Medicaid Fraud Division of the Office of the New Jersey State Comptroller for its assistance.

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

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Defense counsel: Blair R. Zwillman Esq., Parsippany, N.J.
                                    Joseph A. Hayden Jr., Esq.; Roseland, N.J.

Katz Information

CAMDEN, N.J. – Newark Police Officer Victor Patela was sentenced today to 48 months in prison for his role in a conspiracy to commit bank fraud, bank fraud, two counts of loan application fraud and bank bribery, U.S. Attorney Paul J. Fishman announced.

The jury returned the guilty verdict against Patela, 37, of Newark, following a one-week trial before U.S. District Judge Noel L. Hillman in Camden federal court.

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

Patela conspired to defraud Spencer Savings Bank, located in Elmwood Park, N.J., by providing false statements and documents in order to secure a $1,920,000 commercial loan for JVI Realty LLC, ("JVI") a New Jersey limited liability company solely owned by Patela. Patela made bribery payments to a bank employee, who served as the loan officer on JVI Realty's commercial loan. On August 30, 2004, Patela paid a $10,000 bribe to a Spencer Savings Bank employee.

Approximately two weeks later, Patela applied for a commercial real estate loan from Spencer Savings Bank to purchase apartment buildings located in Elizabeth, N.J. In order to obtain the loan, Patela signed a Personal Financial Statement ("PFS") falsely reporting that he had a net worth that included $430,000 cash in bank accounts and real estate valued at $3.5 million. Patela signed the PFS underneath the Representations and Warranties section, agreeing the information was correct, although he knew he did not have the money.

In connection with complying with Spencer Savings Bank's condition that Patela demonstrate proof that he had $480,000 to make a down payment on the properties in Elizabeth, Patela submitted a fake real estate contract to the bank.

The Mortgage & Security Agreement JVI entered into with Spencer Savings prohibited Patela from encumbering or mortgaging the Elizabeth apartment buildings without the bank's written consent. However, JVI, through Patela, subsequently secured a second mortgage on the Elizabeth apartment buildings – signing the second mortgage and mortgage note as a corporate officer of JVI. The $300,000 loan was used as part of the $480,000 equity contribution to purchase the Elizabeth apartment buildings. The same day, Patela, through JVI, paid the bank employee a $20,000 bribe and over the next year paid the bank employee more than $10,000 in separate payments.

In addition to the prison term, Judge Hillman sentenced Patela to three years of supervised release and ordered him to pay $819,793 in restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today's sentence.

The government is represented by Assistant U.S. Attorneys Zahid N. Quraishi and Vikas Khanna of the U.S. Attorney's Office Special Prosecutions Division in Newark.

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Defense counsel: Anna G. Cominsky Esq., Newark

Seven Alleged Members and Supplier of Drug Trafficking Organization Charged

CAMDEN, N.J. – Agents of the FBI, the N.J. State Police and detectives and investigators of the Camden Police Department and Camden County Prosecutor’s Office arrested seven people this morning for their alleged involvement with an illegal drug trafficking operation in Camden, U.S. Attorney Paul J. Fishman announced.

The arrests deal a significant blow to a drug trafficking organization (DTO) allegedly headed by Carl Wiles, a/k/a “Call Call,” 23, of Camden, which operated in the area of Eighth and Tulip streets in the Morgan Village section of Camden. This DTO allegedly sold heroin, crack cocaine and powder cocaine to customers who arrived on foot and by car and who called ahead for service. The arrests of seven of the eight people charged today include all levels of the DTO, from Wiles himself to one of his primary suppliers to lower level managers and workers. Drugs, weapons, ammunition and cash were seized during the arrests, including seven firearms recovered at the residence where Wiles was arrested. The defendants (see chart below) are scheduled to make their initial court appearances this afternoon before U.S. Magistrate Judge Joel Schneider in Camden federal court.

“The defendants in this case operated a well-organized, open-air drug market 24 hours a day, seven days a week, for at least a year,” U.S. Attorney Fishman said. “This prosecution confirms that all of us in law enforcement remain fully committed to improving the quality of life for the people who live in this neighborhood.”

“Dismantling violent gangs is a continuing priority for the FBI, and our law enforcement partners,” Edward J. Hanko, Special Agent in Charge of the FBI’s Philadelphia Division, said. “Today’s arrests are the result of a lengthy investigation by the South Jersey Violent Offender and Gang Task Force, and are an important step toward reclaiming the city of Camden from the thugs who have run its streets for far too long.”

Camden County Prosecutor Warren Faulk said, “These arrests are another example of the cooperative effort among all the law enforcement agencies operating in the city of Camden. Every success in this city stems from these kinds of cooperative efforts.”

“This violent gang has flagrantly terrorized our already challenged city for far too long,” said Camden Police Chief Scott Thomson. “Let today's arrest send a very loud and very clear message to criminals that law enforcement at every level will aggressively target and remove them from the streets with our dynamic C4 (Camden County Crime Commission).initiative.”

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

The organization controlled an area that includes the area of Eighth and Tulip streets, a retail shopping plaza in the 700 block of Morgan Boulevard and areas within the Crestbury Apartments public housing project, located in the 2500 block of South Eighth Street.

An investigation using surveillance, confidential informants, controlled drug purchases, record checks and telephone wiretaps revealed that the Carl Wiles DTO acquired and distributed heroin, crack and powder cocaine; maintained various stash houses; and rented cars to conduct drug-related business.  Wiles and Pulliam handled call-in customers personally and also directed customers to be served at 8th and Tulip streets.  Intercepted conversations and surveillance established that Jackson resupplied Wiles when the organization ran low on heroin.

Intercepted telephone conversations and controlled drug buys reveal that the Wiles DTO used a color-coding based upon the uniform colors of professional sports teams to refer to the different narcotics it sold.  Crack cocaine was packaged in blue-colored bags (“Giants”).  Powder cocaine was sold in clear bags and referred to as “White Sox,” “clear” or “white.”  Heroin was sold over time in red bags (“Redskins”), yellow bags (“Steelers”) and green bags (“Green Bay” or “Jets”).  The narcotics were sold in individual user amounts as well as in re-distribution amounts (bundles), with a heroin bundle typically consisting of 10 to 12 individual bags and a crack bundle containing approximately 40 individual bags.

The investigation further established that Wiles led the organization, with managers Fuquan Pulliam and Kahlil Mims overseeing the workers, William Gideon, Justin Gould, Marqueis Thomas-Randall, Elquinzie Lewis and others.  Intercepted calls reveal not only how the operation was supplied and proceeds collected, but also Wiles’ leadership role. He was intercepted discussing with Pulliam replacing a worker and chastising DTO members for missing customers by moving too slowly, miscounting or not being out on the street enough.  In one conversation, Wiles told a worker: “My thing is loyalty.  You rolling with us, you got loyalty.  You all right.  You rolling with us that mean everybody you see got your back a hundred percent, like that’s what I mean by loyalty.  It’s bigger than what’s just going on.”

U.S. Attorney Fishman credited special agents of the FBI’s Cherry Hill, N.J., resident Agency, Philadelphia Division and the South Jersey Violent Offender and Gang Task Force, under the direction of FBI Special Agent in Charge Hanko; the Camden County Prosecutor’s Office, under the direction of Prosecutor Faulk; the Camden City Police Department, under the direction of Chief Scott Thomson; the N.J. State Police, under the direction of Col. Rick Fuentes; and the Camden Collaborative Crime Commission (“C4”), with the investigation leading to today’s arrests. He also thanked the Philadelphia Police Department, the N.J. Parole Board, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the N.J. Division of Criminal Justice, the Voorhees Police Department, the Gloucester County Prosecutor’s Office, the Salem County Prosecutor’s Office, the Camden County Sheriff’s Office, the Woodbury Police Department and the Pennsauken Police Department for their roles in the case.

The government is represented by Special Assistant U.S. Attorney Ira M. Slovin of the U.S. Attorney’s Office Criminal Division in Camden.

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

This case was developed through the work of the Camden Collaborative Crime Commission (C-4). Every federal, state and local law enforcement agency and prosecutor’s office responsible for combating drug trafficking, gang activity and violent crime in Camden has come together in one location to share intelligence, develop investigative strategies and support the investigative and prosecutorial efforts of its partners. C-4 has merged the individual missions of the various law enforcement agencies into a single strategic attack on drug trafficking and drug-related violent crime. Such intense coordination greatly enhances the law enforcement community’s ability to correctly identify and successfully prosecute the most dangerous criminals in one of our nation’s most dangerous cities.

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Defendants

Name

Age

Residence

Role

23

Oaklyn, N.J.

Leader

Keith Jackson

30

Camden, N.J.

Supplier

Fuquan Pulliam

23

Pennsauken, N.J.

Manager

Khalil Mims

22

Camden, N.J.

Manager

Justin Gould

24

Camden, N.J.

Worker

Marqueis Thomas-Randall

21

Camden, N.J.

Worker

William Gideon

19

Camden, N.J.

Worker

Elquinzie Lewis*

21

Camden, N.J.

Worker

*Not in custody

Wiles et al. Complaint
Carl Wiles
Fuquan Pulliam
Justin Gould
Kahlil Mims
Keith Jackson
Marqueis Thomas-Randall
William Gideon
Elquinzie Lewis

NEWARK, N.J. – A longtime construction official in the property maintenance department of the City of East Orange, N.J., was sentenced today to 18 months in prison for extorting money from a property owner in exchange for the official’s assistance in city government matters, U.S. Attorney Paul J. Fishman announced.

Kim Davis, 46, of New York and formerly of Newark, previously pleaded guilty before U.S. District Judge William H. Walls to Count Two of an Indictment charging him with extortion under color of official right, for accepting a $5,000 corrupt payment in exchange for official action. Judge Walls imposed the sentence today in Newark federal court.

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

Davis was a certified technical assistant to construction officials in the building division of the property maintenance department of East Orange. The building division is responsible for the enforcement of the N.J. Uniform Construction Code and the approval of all applications for construction, alterations and renovations of buildings within the city. 

Davis and an inspector in the code and enforcement division of the property maintenance department – referred to in the Indictment as “Coconspirator One” and identified in court proceedings as Billie Muhammad – conspired in 2007 to advise an East Orange property owner – referred to in the Indictment as Individual One that Davis would provide Individual One, in exchange for a $5,000 cash payment, the requisite permits and certificates from the building department to build a new residence.

On Sept. 7, 2007, Davis met with Individual One and accepted a $5,000 cash payment in exchange for Davis’ official assistance in expediting the process of obtaining the requisite permits and certificates.

In addition to the prison term, Judge Walls sentenced Davis to 1 year of supervised release and fined him $1,000.

On Jan. 21, 2010, Billie Muhammad pleaded guilty to an Information charging him with attempted extortion under color of official right.

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

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

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

Biodiagnostic Laboratory Services LLC and Employees Allegedly Bribed
Physicians to Refer Blood Samples and Order Unnecessary Tests

NEWARK, N.J. – Federal agents arrested the president and part-owner of Parsippany, N.J.-based Biodiagnostic Laboratory Services LLC (BLS), a New Jersey physician and two other BLS employees this morning on charges they participated in a long-running scheme to bribe doctors to refer patient blood samples to BLS and to order unnecessary tests, resulting in tens of millions of dollars in profit for the company.  The charges were announced today by New Jersey U.S. Attorney Paul J. Fishman.

BLS president David Nicoll, 39, of Mountain Lakes, N.J.; Scott Nicoll, 32, of Wayne, N.J., a senior BLS employee and David Nicoll’s brother; and Craig Nordman, 34, of Whippany, N.J., a BLS employee and the CEO of Advantech Sales LLC – an entity used by BLS to make illegal payments – are charged in a federal Complaint with conspiring to bribe physicians over a period of several years. BLS is also charged with the conspiracy.

Frank Santangelo, 43, of Boonton, N.J., a New Jersey physician with offices in Montville and Wayne, is charged in the Complaint for allegedly accepting bribes to refer patients to BLS and violating his duty of fidelity to his patients. Santangelo allegedly received more than $700,000 in bribe payments from BLS and sent the company more than $4.2 million in blood referrals.

The defendants are scheduled to appear this afternoon before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.

“People depend on their doctors to make medical decisions about care based solely on medical need,” said U.S. Attorney Fishman. “When doctors order extra tests or choose particular labs in exchange for cash, they abandon their obligation to their patients and to all of us who support our nation’s health care system. No patients should have to worry that their doctors’ loyalty and judgment have been bought by a salesman trying to make a buck.”

“The FBI views health care fraud as a severe crime problem that affects every American,” said FBI Special Agent in Charge Aaron T. Ford.  “Fraud and abuse take critical resources out of our health care system, and contribute to the rising cost of health care for everyone. Today’s arrests are the result of a long term, multi-agency investigation into a complex health care fraud scheme, requiring substantial investigative resources. The FBI, with its law enforcement partners, will continue to provide a significant amount of expert resources to investigate these crimes.”

“Kickbacks have no place in the healthcare industry. Financial inducements only cloud medical judgment. This elaborate kickback scheme had one goal, and that is greed,” said Tom O’Donnell, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Federal and state taxpayers, and vulnerable patients, deserve better.”

According to the Complaint unsealed today:

Between 2006 and 2013, BLS and entities it funded paid millions of dollars to physicians to induce them to refer patient blood samples to BLS. From these referrals, BLS received at least tens of millions of dollars from private health insurance companies and Medicare.

Numerous physicians were bribed under the guise of lease, service, and/or consulting agreements. Under the lease and service agreements, between 2006 and 2009, physicians were frequently paid thousands of dollars a month by BLS for space in medical offices that BLS did not need or actually use and to perform routine blood drawing services that had little real dollar value.

In a text message referenced in the Complaint, David Nicoll wrote to Santangelo about the status of their referral agreement, stating that BLS “really can’t afford the 40-50,000 [dollars] a month if the girls aren’t going to be drawing any blood,”  to which Santangelo responded by stating, “U no u can count on me!” and “I never let u down!”

When the state of New Jersey sought to address the problem of laboratories using lease agreements to bribe physicians for referrals – effectively prohibiting all leases between blood laboratories and physicians in 2010 – BLS, David Nicoll, Scott Nicoll, and Nordman funded and used at least half a dozen entities to disguise bribe payments to physicians.

In one example from the Complaint, a physician was paid $1,500 per month by Nordman – who identified himself as both a BLS employee and the CEO of Advantech – for spending less than two minutes each month filling out a one-page questionnaire asking how often sales representatives visited the physician’s office, which insurance companies were in-network for the physician and which out-of-network insurance companies did the physician bill. In reality, the payments were to refer patients’ blood samples to BLS. 

Various recorded conversations are also detailed in the Complaint, including one in which Nordman urges another physician to order “more tests,” stating “that’s where it really is.  I mean if we get 10 bloods for $1,000 as opposed to 10 bloods for $4,000 or 5 bloods for $4,000 obviously there’s more. We get paid a percentage obviously.” In a second conversation, Scott Nicoll tells this same physician, “I would like to be able to get you you know around 1,500 [dollars] a month if I can but I need we would either need more tests or more patients or something along those lines . . .  you’re doing about a $1,000 a bag per patient . . . if we could, we could somehow get that up in the two’s then I’m looking at making 4,000 and I have no problem paying you know 1,500 [dollars] for it.”

Over the course of the charged conspiracy, BLS has made more than $200 million from the testing of blood specimens and related services. David Nicoll received more than $33 million in distributions from BLS during that same time period, during which he also spent millions on personal items: more than $5 million on high-end and collectible automobiles, including approximately $580,000 for a Yenko Nova and approximately $365,000 for a Yenko Chevelle, approximately $300,000 for a Ferrari and approximately $291,000 for a Corvette; more than $700,000 to purchase a Manhattan apartment for a female companion; $600,000 on private jet charters; $392,000 on tickets to sporting events; $216,000 at electronics stores; and $154,000 at a gentleman’s club and restaurant.

“It is alleged in today’s Complaint that the president and other employees of BLS bribed physicians to refer patients to their lab and order unnecessary lab tests, reaping millions of dollars, all in the name of greed,” stated Shantelle P. Kitchen, Acting Special Agent in Charge, IRS-Criminal Investigation, Newark Field office.  “Medical tests should only be run when medically necessary, not so someone can buy exotic cars and charter private jets.  This type of health care fraud will not be tolerated and IRS-Criminal Investigation, along with our law enforcement partners, will vigorously investigate these crimes to bring the perpetrators to justice.”

“Postal Inspectors, along with other law enforcement agents, unraveled a sophisticated false billing scheme that resulted in millions of dollars in losses,” said Acting Inspector in Charge Maria Kelokates, Newark Division of the U.S. Postal Inspection Service. “Postal Inspectors will continue to aggressively pursue investigations in which the U.S. Mail is used to facilitate a crime.”

David Nicoll, Scott Nicoll and Nordman are charged with one count of conspiring to violate the Anti-Kickback Statute and the Federal Travel Act.  Santangelo is charged in two counts – with substantive violations of the Anti-Kickback Statute and the Federal Travel Act, for allegedly using the interstate mails in aid of commercial bribery.  If convicted, the defendants face a maximum potential penalty of five years in prison on each of the counts with which they are charged.  Each count also carries a maximum $250,000 fine, or twice the gross gain or loss from the offense.  BLS is also charged with the conspiracy, and faces a maximum potential penalty of five years of probation and a $500,000 fine, or twice the gross gain or loss.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge O’Donnell; IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Kitchen, and the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Kelokates.

The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Melissa Jampol and Deputy Chief Jacob T. Elberg 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.

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

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BLS et al. Complaint