District of New Jersey

NEWARK, N.J. – A Hudson County, New Jersey, man was indicted today on charges of conspiring to produce and distribute, and producing, distributing, receiving, and possessing, images of child sexual abuse, U.S. Attorney Craig Carpenito announced.

Ramon Zelaya, 36, of Union City, is charged by superseding indictment with one count of conspiring to produce and distribute child pornography, two counts of sexual exploitation of a child, one count of distributing child pornography, two counts of receiving child pornography, and two counts of possessing child pornography. Zelaya was initially charged by complaint in March 2019 and by indictment in November 2019.

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

On April 21, 2018, Zelaya used Facebook to conspire with an individual in the Dominican Republic to sexually abuse the individual’s minor child, create images of that abuse, and send the images to Zelaya, who then distributed the images among various Facebook accounts he controlled.

Between Aug. 20, 2018, and Sept. 20, 2018, Zelaya, representing himself as a teenaged boy, used Instagram communications to persuade a child to send him a revealing photograph. He then threatened to reveal that photograph as a means of coercing the child into sending him sexually explicit images. Zelaya subsequently distributed the images via Facebook.

The production charges each carry a mandatory minimum penalty of 15 years in prison, a maximum of 30 years, and a $250,000 fine. The distribution charges each carry a mandatory minimum penalty of five years in prison, a maximum of 20 years, and a $250,000 fine. The possession charges carry maximum penalties of 20 years in prison and 10 years in prison, respectively, as well as a $250,000 fine for each. The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited special agents of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina, with the investigation leading to the charges. He also thanked the Union City, New Jersey, Police Department, under the direction of Chief Nichelle Luster, the Bayonne Police Department, under the direction of Chief of Police Robert Geisler, and the Public Prosecutor’s Office of San Cristóbal, Dominican Republic, for assistance in the investigation.

The government is represented by Assistant U.S. Attorney Sarah A. Sulkowski of the U.S. Attorney’s Office Cybercrime Unit in Newark.

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

NEWARK, N.J. – Four people were arrested today for their roles in a conspiracy to commit bank fraud, including soliciting U.S. Postal Service (USPS) employees to steal check books and credit cards from the mail, depositing fraudulent checks, including pandemic relief checks, and using credit cards without authorization, U.S. Attorney Craig Carpenito announced.

Jeffrey Bennett, 26, of Irvington, New Jersey; Tashon Ragan, 21, of Hillside, New Jersey; Jahaad Flip, 21, and Janel Blackman, 41, both of Newark, are each charged by complaint with one count of conspiracy to commit bank fraud. Ragan and Flip are also charged with one count of passing fictitious obligations, namely counterfeit Economic Impact Payment (EIP) checks.  Bennett and Ragan are also charged with one count each of aggravated identity theft.  All four defendants are scheduled to appear this afternoon via videoconference before U.S. Magistrate Judge Mark Falk.

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

From February 2019 to May 2020, a group that referred to themselves as the “Members,” and their associates, including Bennett, Flip, and Ragan, conspired to solicit and did solicit USPS employees, including Blackman, to steal U.S. mail containing checks, checkbooks, debit cards, and credit cards in exchange for cash. Once they received stolen checks, Bennett, Flip, Ragan, and others, fraudulently forged the signatures of the accountholders and negotiated the checks by making them payable to individuals, some of whom were New Jersey high school students, who had given the Members and their associates access to their accounts, also in exchange for cash. Bennett, Flip, and Ragan then attempted to and did deposit the fraudulent checks online and at various bank ATMs throughout New Jersey and later withdrew funds from the bank accounts before the victim banks could discover the fraud and decline the checks. Bennett also used the stolen credit cards to purchase gift cards or Apple products, which he then resold to generate additional proceeds from the scheme. Bennett, Flip, Ragan, and Blackman split the proceeds of the fraud among themselves.

Ragan and Flip are also charged with depositing thousands of dollars of counterfeit EIP checks purportedly issued pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. The CARES Act authorized EIP payments structured as one-time refundable tax credits to certain eligible taxpayers of $1,200 for individuals, $2,400 for married couples filing jointly, and up to $500 for each qualifying child.   

The conspiracy charge is punishable by a maximum potential penalty of 30 years in prison. The passing fictitious obligations charge is punishable by a maximum penalty of 25 years in prison. The aggravated identity theft charge is punishable by a mandatory sentence of two years in prison to be served consecutively to any other term of imprisonment imposed. The bank fraud conspiracy also carries a fine of up to $1 million. All other charges are punishable by a maximum $250,000 fine. 

U.S. Attorney Carpenito credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn; special agents with the U.S. Postal Service – Office of Inspector General, under the direction of Special Agent in Charge Matthew Modafferi, Northeast Area Field Office; special agents with IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; and special agents with the Office of the Treasury Inspector General for Tax Administration (TIGTA), under the direction of Special Agent in Charge Andrew McKay, with the investigation leading to today’s arrests. He also thanked the Summit Police Department, the New Providence Police Department, the Piscataway Police Department, the Newark Police Department, the South Orange Police Department, and the Little Falls Police Department for their assistance.

The government is represented by Assistant U.S. Attorneys Jonathan Fayer of the Criminal Division and Elaine K. Lou of the Special Prosecutions Division in Newark.

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

NEWARK, N.J. – Five Essex County men have been arrested today and charged with distribution of heroin, fentanyl and cocaine in and around the Reservoir Site Townhouses in Newark, U.S. Attorney Craig Carpenito announced.

Arrested today and charged by complaint are:

• Dayvon Rogers, 29, of Newark, two counts of distribution of cocaine in August and September 2020;
• Rasheed Gilbert, 27, of East Orange, one count of distribution of cocaine in January 2020, and one count of distribution of heroin and cocaine in January 2020;
• Naim Frazier, 32, of Newark, one count of distribution of heroin and fentanyl in January 2020;
• Rahjohn Montgomery, 27, of East Orange, one count of distribution of heroin in January 2020, and one count of distribution of heroin, fentanyl, and cocaine in June 2020; and
• Rasheen Thomas, 25, of Newark, one count of distribution of heroin and cocaine in June 2020, three counts of distribution of heroin and cocaine in July 2020, and two counts of distribution of heroin and cocaine in August 2020.

The defendants are scheduled to appear by videoconference this afternoon before U.S. Magistrate Judge Mark Falk.

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

The defendants sold narcotics in and around the Reservoir Site Townhouses in Newark, selling to individuals who were confidential informants working with law enforcement. The narcotics sales were documented through audio and video recordings, text messages, and physical surveillance.

Each count in the complaints carries a maximum penalty of 20 years in prison and a fine of $1 million.

U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, under the direction of Special Agent in Charge George M. Crouch Jr.; the Newark Police Department, under the direction of Public Safety Director Anthony F. Ambrose; Essex County Sheriff’s Office, under the direction of Sheriff Armando B. Fontoura; the East Orange Police Department, under the direction of Chief Phyllis Bindi: and Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Theodore N. Stephens II, with the investigation leading to the charges.

This investigation is part of the Violent Crime Initiative (VCI) in Newark. The Newark VCI was formed in August 2017 by the U.S. Attorney’s Office for the District of New Jersey, the Essex County Prosecutor’s Office, and the City of Newark’s Department of Public Safety for the sole purpose of combatting violent crime in and around the Newark. As part of this partnership, federal, state, county, and city agencies collaborate and pool resources to prosecute violent offenders who endanger the safety of the community. The VCI includes the U.S. Attorney’s Office, the DEA, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Federal Bureau of Investigation, the U.S. Marshals, the Newark Department of Public Safety, the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, New Jersey State Parole Board, New Jersey State Police Regional Operations and Intelligence Center/Real Time Crime Center, and New Jersey Department of Corrections.

The government is represented by Assistant U.S. Attorneys Emma Spiro and Jonathan W. Romankow of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

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

NEWARK, N.J. – An Essex County, New Jersey, man made his initial appearance today on charges of illegally possessing a handgun and possessing heroin with the intent to distribute, U.S. Attorney Craig Carpenito announced.

Antoine Hawkins, 31, of Newark, is charged by complaint with one count of possession of a firearm and ammunition by a convicted felon and one count of possession with intent to distribute heroin. He made his initial appearance today by videoconference before U.S. Magistrate Judge Mark Falk and was detained.

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

On Sept. 16, 2020, law enforcement officers conducted a surveillance operation in connection with a shooting on Aug. 18, 2020. An officer approached Hawkins, who appeared to be the person of interest in the shooting incident. During a conversation between the law enforcement officer and Hawkins, the law enforcement officer observed what appeared to be the imprint of a firearm on Hawkins’s jacket. The law enforcement officer frisked Hawkins and seized a 9mm Springfield Armory XDM pistol, which was loaded with 19 rounds of ammunition.

After Hawkins was arrested for possessing the pistol and the ammunition, law enforcement executed a search warrant inside of Hawkins’s residence, which revealed 626 glassine envelopes containing suspected heroin and three 9mm magazines.

The firearm offense carries a maximum potential penalty of 10 years in prison, and a fine of $250,000. The narcotics offense carries a maximum potential penalty of 30 years in prison, and a fine of $2 million.

U.S. Attorney Carpenito credited the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Theodore N. Stephens II; members of the Newark Department of Public Safety, under the direction of Public Safety Director Anthony F. Ambrose; special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Susan A. Gibson in Newark; and special agents of the Department of Homeland Security, Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Jason Molina, with the investigation leading to the charges.

This investigation is part of the Violent Crime Initiative (VCI) in Newark. The Newark VCI was formed in August 2017 by the U.S. Attorney’s Office for the District of New Jersey, the Essex County Prosecutor’s Office, and the City of Newark’s Department of Public Safety for the sole purpose of combatting violent crime in and around the Newark. As part of this partnership, federal, state, county, and city agencies collaborate and pool resources to prosecute violent offenders who endanger the safety of the community. The VCI includes the U.S. Attorney’s Office, the DEA, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Federal Bureau of Investigation, the U.S. Marshals, the Newark Department of Public Safety, the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, New Jersey State Parole Board, New Jersey State Police Regional Operations and Intelligence Center/Real Time Crime Center, and New Jersey Department of Corrections.

The government is represented by Assistant U.S. Attorney Benjamin Levin of the U.S. Attorney’s Office Violent 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.

NEWARK, N.J. – Two Iranian nationals have been charged in connection with a coordinated cyber intrusion campaign – sometimes at the behest of the government of Iran – targeting computers in New Jersey and around the world, U.S. Attorney Craig Carpenito announced today.

Hooman Heidarian, a/k/a “neo,” 30, and Mehdi Farhadi, a/k/a “Mehdi Mahdavi” and “Mohammad Mehdi Farhadi Ramin,” 34, both of Hamedan, Iran, are each charged in a 10-count indictment returned Sept. 15, 2020, with: one count each of conspiracy to commit fraud and related activity in connection with computers and access devices; computer fraud - unauthorized access to protected computers: computer fraud, unauthorized damage to protected computers; conspiracy to commit wire fraud; and access device fraud; and five counts of aggravated identity theft.

“These Iranian nationals allegedly conducted a wide-ranging campaign on computers here in New Jersey and around the world,” U.S. Attorney Carpenito said. “They brazenly infiltrated computer systems and targeted intellectual property and often sought to intimidate perceived enemies of Iran, including dissidents fighting for human rights in Iran and around the world. This conduct threatens our national security, and as a result, these defendants are wanted by the FBI and are considered fugitives from justice.”

“We will not bring the rule of law to cyberspace until governments refuse to provide safe harbor for criminal hacking within their borders,” Assistant Attorney General for National Security John C. Demers said. “Unfortunately, our cases demonstrate that at least four nations—Iran, China, Russia and North Korea—will allow criminal hackers to victimize individuals and companies from around the world, as long as these hackers will also work for that country’s government—gathering information on human rights activists, dissidents and others of intelligence interest.  Today’s defendants will now learn that such service to the Iranian regime is not an asset, but a criminal yoke that they will now carry until the day they are brought to justice.”

“The indictment of two Iranian nationals charged with computer hacking, fraud, and aggravated identity theft demonstrates how the FBI continues to work relentlessly with our law enforcement partners to identify cybercriminals who seek to do harm to American citizens, businesses, and universities, regardless of where those criminals may reside and hold them accountable,” George M. Crouch Jr., Special Agent in Charge of the FBI Newark Division, said. “Mehdi Farhadi and Hooman Heidarian are now fugitives and have been added to the FBI website for charges in connection with a massive, coordinated cyber intrusion campaign. These actions demonstrate how imposing risks and consequences on our cyber adversaries will continue to be a top priority for the FBI.” 

According to the indictment:

Beginning in at least 2013, the defendants were responsible for a coordinated campaign of cyber intrusions into computer systems in New Jersey and around the world. The victims included several American and foreign universities, a Washington, D.C.-based think tank, a defense contractor, an aerospace company, a foreign policy organization, non-governmental organizations (NGOs), non-profits, and foreign government and other entities identified as rivals or adversaries to Iran around the world.

Heidarian and Farhadi conducted many of these intrusions on behalf of the Iranian government. The stolen data was typically highly protected and extremely sensitive, and included confidential communications pertaining to national security, foreign policy intelligence, non-military nuclear information, aerospace data, human rights activist information, victim financial information and personally identifiable information, and intellectual property, including unpublished scientific research. The defendants also often vandalized websites using the pseudonym “Sejeal” and posted messages that appeared to signal the demise of Iran’s internal opposition, foreign adversaries, and countries identified as rivals to Iran, including Israel and Saudi Arabia.

Tactics and Techniques

The defendants conducted online reconnaissance to carefully select their victims, gathering data and intelligence to determine their areas of expertise, and assessing computer networks in preparation for launching cyber-attacks. They often used information obtained at this stage in latter phases of their hacking activities to complete a picture of processes, organizational structure, and potential soft spots of victim networks. The defendants used vulnerability-scanning tools to test the victim networks and to reveal security holes.

The defendants gained and maintained unauthorized access to victim networks using various tools, including: session hijacking, where a valid computer session was exploited to gain unauthorized access to information or services in a computer system; SQL injection, in which they used malicious code to access information that was not intended to be displayed, such as sensitive government data, user details, and personal identifiers; and malicious programs installations, which allowed the defendants to maintain unauthorized access to computers.

The defendants then used key-loggers and “remote access Trojans” to maintain access and monitor the actions of users of the victim networks. They also developed a botnet tool, which facilitated the spread of malware, denial of service attacks, and spamming to victim networks. In some instances, the defendants used their unauthorized access to victim networks or accounts to establish automated forwarding rules for compromised victim accounts, whereby new outgoing and incoming emails were automatically forwarded from the compromised accounts to accounts controlled by defendants

Using these methods, the defendants stole hundreds of terabytes of data, including confidential victim work product and intellectual property, and personal identifying information, such as access credentials, names, addresses, phone numbers, Social Security numbers, and birthdates. The defendants marketed stolen data on the black market.

In addition to stealing intellectual property and other data, the defendants, using the pseudonym “Sejeal,” replaced the publicly available contents of websites with political and other ideological content, thereby defacing websites, for the apparent purpose of projecting Iranian influence and threatening perceived enemies of Iran. The defacements featured, among other things, images of burning Israeli flags and threats forecasting the death or demise of citizens in the United States, Israel, and elsewhere.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Crouch in Newark, with the investigation leading to the charges.

The counts of conspiracy to commit computer fraud and related activity in connection with computers and access devices, unauthorized access to protected computers, and computer fraud – unauthorized damage to protected computers, each carry a maximum sentence of five years in prison. The count of conspiracy to commit wire fraud carries a maximum sentence of 20 years in prison. The counts of aggravated identity theft each carry a mandatory sentence of two years in prison. The count of access device fraud carries a maximum sentence of 10 years in prison.

The government is represented by Assistant U.S. Attorney Dean C. Sovolos of the U.S. Attorney’s Office National Security Unit, Daniel V. Shapiro, Deputy Chief of the U.S. Attorney’s Office Criminal Division, and Trial Attorney Scott McCulloch of the National Security Division. 

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

Two Iranian nationals have been charged in connection with a coordinated cyber intrusion campaign – sometimes at the behest of the government of the Islamic Republic of Iran (Iran) – targeting computers in New Jersey, elsewhere in the United States, Europe and the Middle East, the Department of Justice announced today.

According to a 10-count indictment returned on Sept. 15, 2020, Hooman Heidarian, a/k/a “neo,” 30, and Mehdi Farhadi, a/k/a “Mehdi Mahdavi” and “Mohammad Mehdi Farhadi Ramin,” 34, both of Hamedan, Iran, stole hundreds of terabytes of data, which typically included confidential communications pertaining to national security, foreign policy intelligence, non-military nuclear information, aerospace data, human rights activist information, victim financial information and personally identifiable information, and intellectual property, including unpublished scientific research.  In some instances, the defendants’ hacks were politically motivated or at the behest of Iran, including instances where they obtained information regarding dissidents, human rights activists, and opposition leaders.  In other instances, the defendants sold the hacked data and information on the black market for private financial gain.

“We will not bring the rule of law to cyberspace until governments refuse to provide safe harbor for criminal hacking within their borders,” said Assistant Attorney General for National Security John C. Demers.  “Unfortunately, our cases demonstrate that at least four nations — Iran, China, Russia and North Korea — will allow criminal hackers to victimize individuals and companies from around the world, as long as these hackers will also work for that country’s government — gathering information on human rights activists, dissidents and others of intelligence interest.  Today’s defendants will now learn that such service to the Iranian regime is not an asset, but a criminal yoke that they will now carry until the day they are brought to justice.”

“These Iranian nationals allegedly conducted a wide-ranging campaign on computers here in New Jersey and around the world,” said U.S. Attorney Carpenito for the District of New Jersey. “They brazenly infiltrated computer systems and targeted intellectual property and often sought to intimidate perceived enemies of Iran, including dissidents fighting for human rights in Iran and around the world. This conduct threatens our national security, and as a result, these defendants are wanted by the FBI and are considered fugitives from justice.”

“The indictment of two Iranian nationals charged with computer hacking, fraud, and aggravated identity theft demonstrates how the FBI continues to work relentlessly with our law enforcement partners to identify cybercriminals who seek to do harm to American citizens, businesses, and universities, regardless of where those criminals may reside and hold them accountable,” said George M. Crouch Jr., Special Agent in Charge of the FBI Newark Division. “Mehdi Farhadi and Hooman Heidarian are now fugitives and have been added to the FBI website for charges in connection with a massive, coordinated cyber intrusion campaign. These actions demonstrate how imposing risks and consequences on our cyber adversaries will continue to be a top priority for the FBI.” 

According to the indictment:

Beginning in at least 2013, the defendants were responsible for a coordinated campaign of cyber intrusions into computer systems in New Jersey and around the world. The victims included several American and foreign universities, a Washington, D.C.-based think tank, a defense contractor, an aerospace company, a foreign policy organization, non-governmental organizations (NGOs), non-profits, and foreign government and other entities the defendants identified as rivals or adversaries to Iran.  In addition to the theft of highly protected and sensitive data, the defendants also vandalized websites, often under the pseudonym “Sejeal” and posted messages that appeared to signal the demise of Iran’s internal opposition, foreign adversaries, and countries identified as rivals to Iran, including Israel and Saudi Arabia.

To select their victims, the defendants conducted online reconnaissance, including gathering public data and intelligence to determine a victim’s areas of expertise, and using vulnerability scanning tools and other means to assess computer networks.  The defendants gained and maintained unauthorized access to victim networks using various tools, including: session hijacking, where a valid computer session was exploited to gain unauthorized access to information or services in a computer system; SQL injection, in which they used malicious code to access information that was not intended to be displayed, such as sensitive government data, user details, and personal identifiers; and malicious programs installations, which allowed the defendants to maintain unauthorized access to computers.

The defendants then used key-loggers and “remote access Trojans” to maintain access and monitor the actions of users of the victim networks. They also developed a botnet tool, which facilitated the spread of malware, denial of service attacks, and spamming to victim networks. In some instances, the defendants used their unauthorized access to victim networks or accounts to establish automated forwarding rules for compromised victim accounts, whereby new outgoing and incoming emails were automatically forwarded from the compromised accounts to accounts controlled by defendants.

Assistant Attorney General Demers and U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Crouch in Newark, with the investigation leading to the charges.

Each defendant is charged with: one count of conspiracy to commit fraud and related activity in connection with computers and access devices; unauthorized access to protected computers; unauthorized damage to protected computers; conspiracy to commit wire fraud; and access device fraud; and five counts of aggravated identity theft.

The counts of conspiracy to commit computer fraud and related activity in connection with computers and access devices, and unauthorized access to protected computers, each carry a maximum sentence of five years in prison. The counts of unauthorized damage to protected computers and access device fraud each carry a maximum sentence of ten years in prison.  The count of conspiracy to commit wire fraud carries a maximum sentence of 20 years in prison. The counts of aggravated identity theft each carry a mandatory sentence of two years in prison.

The government is represented by Assistant U.S. Attorney Dean C. Sovolos of the U.S. Attorney’s Office National Security Unit, Daniel V. Shapiro, Deputy Chief of the U.S. Attorney’s Office Criminal Division, and Trial Attorney Scott McCulloch of the National Security Division’s Counterintelligence and Export Control Section. 

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

TRENTON, N.J. – A Trenton man was sentenced today to 204 months in prison for his role as a supplier to a significant drug trafficking conspiracy that distributed more than one kilogram of heroin in Trenton and the surrounding area, U.S. Attorney Craig Carpenito announced.

David Antonio, a/k/a “Pop,” a/k/a “Papi,” a/k/a “Santiago Ramirez,” 32, previously pleaded guilty before Chief U.S. District Judge Freda L. Wolfson in Trenton federal court to Count One of a third superseding indictment charging him with conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin. Judge Wolfson imposed the sentence today by videoconference.

In October 2018, Antonio, and 25 other individuals were charged by criminal complaint with conspiracy to distribute heroin. On Feb. 27, 2020, a grand jury returned a 10-count third superseding indictment charging Antonio and six other defendants with conspiracy to distribute one kilogram or more of heroin and various other drug and firearm offenses. Twenty-three of the 26 defendants charged in the complaint have pleaded guilty.

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

From October 2017 to October 2018, the defendant and others engaged in a large drug trafficking conspiracy that operated in the areas of Martin Luther King Boulevard, Sanford Street, Middle Rose Street, Southard Street, Hoffman Avenue, Chambers Street, and Coolidge Avenue in Trenton, and which sought to profit from the distribution of heroin and numerous other controlled substances. Through the interception of telephone calls and text messages pursuant to court-authorized wiretap orders, controlled purchases of heroin, the use of confidential sources of information, and other investigative techniques, law enforcement learned that conspirators Jakir Taylor and Jerome Roberts obtained regular supplies of hundreds of “bricks” of heroin from Antonio. Intercepted communications among Taylor, Roberts, Antonio, and other conspirators revealed that Taylor and Roberts agreed to obtain from Antonio, and that Antonio agreed to supply, a “motherlode” of as many as 1,400 bricks of heroin in a single delivery – equating to approximately 1.5 kilograms of heroin. Taylor told Antonio that he intended to “flood the streets” of Trenton with this large supply, and Antonio agreed to supply a sufficient amount of heroin to Taylor that would allow him to do so. In communications with Taylor, Antonio indicated that he was “filling the bags” up with heroin and fentanyl. During coordinated arrests on Oct. 25, 2018, law enforcement arrested Antonio at a residence in Trenton, and recovered more than 1.4 kilograms of heroin, in addition to a significant amount of paraphernalia used to package heroin for distribution.

In addition to the prison term, Judge Wolfson sentenced Antonio to five years of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Trenton Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr.; special agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Newark Division, Trenton Field Office, under the direction of Special Agent in Charge Charlie J. Patterson; officers of the Trenton Police Department, under the direction of Police Director Sheilah Coley; officers of the Princeton Police Department, under the direction of Chief of Police Nicholas Sutter; officers of the Ewing Police Department, under the direction of Chief of Police John P. Stemler III; officers of the Burlington Township Police Department, under the direction of Police Director Bruce Painter; and detectives of the Burlington County Prosecutor’s Office, under the  direction of Prosecutor Scott A. Coffina, with the investigation leading to today’s sentencing. He also thanked officers of the New Jersey State Police, under the direction of Superintendent Col. Patrick J. Callahan; detectives of the Mercer County Prosecutor’s Office, under the direction of Prosecutor Angelo Onofri; officers of the Mercer County Sheriff’s Office, under the direction of Sheriff John A. Kemler; and members of the New Jersey State Board of Parole for their assistance in the investigation and prosecution of the case.

The government is represented by Attorney-in-Charge J. Brendan Day and Assistant U.S. Attorney Alexander Ramey of the U.S. Attorney’s Office’s Criminal Division in Trenton.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Greater Trenton Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies to enhance the identification, apprehension, and prosecution of individuals involved in gang-related activities, violent crime, and drug distribution in and around the greater Trenton area. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.

The three remaining defendants charged in this case are presumed innocent until proven guilty.

NEWARK, N.J. – A Morris County, New Jersey, couple who owned and operated construction businesses in Morris County admitted their roles in filing false tax returns that failed to report all their personal income, U.S. Attorney Craig Carpenito announced.

Roger Magill, 50, of Wharton, the owner and operator of Reliable Construction, a/k/a Reliable Paving and Hackensack Pavers, a/k/a Hackensack Paving – collectively, the Magill entities – pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with three counts of tax evasion. His wife, Ruby Magill, 50, of Wharton, pleaded guilty before Judge Wigenton to an information charging her with one count of misprision of felony.

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

Roger Magill admitted that, between 2014 and 2016, he owned the Magill entities that operated in Morris County, New Jersey. Roger Magill admitted to obtaining hundreds of thousands of dollars in personal income from the Magill entities and attempted to hide his personal income from the IRS by using a fictitious identity to cash business checks at several check cashing businesses. Roger Magill admitted that he evaded paying $261,758 in personal income taxes. Ruby Magill admitted that she purposefully facilitated Roger Magill’s tax evasion scheme by allowing him to deposit his hidden income into business bank accounts that she operated and controlled.

The charges to which Roger Magill pleaded guilty carry a maximum potential penalty of five years in prison and a $250,000 fine. The charge to which Ruby Magill pleaded guilty carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencings are scheduled for Jan. 20, 2021.

U.S. Attorney Carpenito credited agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to today’s guilty pleas.

The government is represented by Assistant U.S. Attorney Jamel Semper, Chief of the Organized Crime and Gangs Unit in Newark.

TRENTON, N.J. – A former member of Paraguay’s Congress and her husband have admitted their roles in an international money laundering conspiracy, U.S. Attorney Craig Carpenito announced today.

Raimundo Va, 45, pleaded guilty today before Chief Judge Freda L. Wolfson to an information charging him with one count of conspiracy to commit money laundering. His wife, Cynthia Elizabeth Tarrago Diaz, 41, pleaded guilty on Sept. 15, 2020, before Judge Wolfson to an information charging her with conspiracy to commit money laundering.

On Nov. 21, 2019, Tarrago and Va were arrested by the FBI after they arrived in Newark as part of their unlawful money laundering activities, and were charged in a criminal complaint along with a third individual, Rodrigo Alvarenga Paredes, who remains at large in Paraguay.

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

Until January 2019, Tarrago was a member of Paraguay’s Congress, and in late 2019 had publicly announced her intention to run for mayor of the capital district of Asunción. While in office, Tarrago and her husband, Va, agreed to accept at least $2 million in United States currency from two individuals who represented themselves to be narcotics traffickers, believing the money to be proceeds of unlawful narcotics trafficking, and to launder the funds through an international network of accounts in order to disguise the unlawful source of the proceeds. Tarrago and Va traveled to New Jersey and Florida on multiple occasions and accepted approximately $800,000 in United States currency from the purported drug traffickers, and caused those funds to be laundered through the conspiracy’s network of accounts, and ultimately transferred back to an account maintained by the purported drug traffickers. To disguise the illicit source of the funds, members of the conspiracy generated fraudulent invoices that stated legitimate business reasons for the transfers of laundered funds to the purported drug traffickers’ account. Moreover, on multiple occasions during the purported drug dealers’ meetings with Tarrago and Va, Tarrago indicated that she would be able to assist the purported drug dealers with procuring large quantities of cocaine from Paraguay at an inexpensive price.

Unbeknownst to Tarrago and Va, the currency that they accepted from the purported drug traffickers and caused to be laundered was not actually illicit drug proceeds. Rather, those funds were provided to Tarrago and Va by two undercover FBI agents as part of an extensive investigation of the money laundering network. During the investigation, the undercover agents met with Tarrago and Va in the United States on numerous occasions, and obtained substantial video and audio recordings of their interactions with Tarrago and Va, during which details of the money laundering network were discussed. The evidence obtained during the investigation revealed that Alvarenga Paredes, operating through the auspices of a money-exchange company in Paraguay, coordinated the laundering of the funds that the undercover agents provided to Tarrago and Va.

The money laundering conspiracy counts against Tarrago and Va carry a statutory maximum potential penalty of 20 years in prison, and a maximum fine of the greater of $500,000 or twice the value of the funds involved in the conspiracy. Sentencing for both defendants is scheduled for Jan. 21, 2021. The investigation is continuing.

U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Trenton Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr., with the investigation leading to today’s guilty pleas. He also thanked the Department of Justice’s Office of International Affairs and the FBI’s Legal Attaché in Buenos Aires for their assistance in the case.

The government is represented by Assistant U.S. Attorneys R. Joseph Gribko of the Criminal Division in Trenton and J. Brendan Day, Attorney in Charge of the Trenton Office of the U.S. Attorney’s Office.

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

TRENTON, N.J. – A Dominican Republic national was sentenced today to 32 months in prison for illegally using the identity of another person to fraudulently obtain a U.S. passport, U.S. Attorney Craig Carpenito announced.

Arnaldo Antonio Medrano Bonilla, 56, of the Dominican Republic, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with one count of passport fraud and one count of aggravated identity theft. Judge Sheridan imposed the sentence by videoconference today.

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

In August 2015, Medrano submitted a fraudulent renewal application for a U.S. passport, listing the name, birth date, and Social Security number of a U.S. citizen, but providing his own photograph. Medrano presented that U.S. citizen’s birth certificate in further support of his fraudulent application. In this way, Medrano unlawfully obtained a U.S. passport bearing his own photograph and the identity of another person.

In addition to the prison term, Judge Sheridan sentenced Medrano to three years of supervised release.

U.S. Attorney Carpenito credited special agents of the U.S. Department of State, Diplomatic Security Service, New York Field Office, under the direction of Special Agent in Charge Keith Byrne, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Andrew M. Trombly of the Cybercrime Unit in Newark.

NEWARK, N.J. – A Bergen County, New Jersey, attorney who allegedly fraudulently obtained nearly $9 million in federal Paycheck Protection Program (PPP) loans has been indicted, U.S. Attorney Craig Carpenito and Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division announced

Jae H. Choi, 48, of Cliffside Park, New Jersey, previously charged by complaint, was charged by indictment on Sept. 15, 2020, with four counts of bank fraud, four counts of false statements on a loan application, one count of aggravated identity theft, and one count of money laundering. The indictment seeks to forfeit 11 bank accounts and one investment account for the proceeds of the fraud, as well as a million-dollar home Choi purchased in Cresskill, New Jersey.  An arraignment date has not yet been set.

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

Choi submitted four fraudulent PPP loan applications to four lenders on behalf of four businesses that purportedly provided educational services. Choi fabricated the existence of hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications.

Choi falsely represented to the lenders that the companies controlled by him had hundreds of employees and paid over $3 million in monthly wages. In one instance, Choi emailed a lender falsely claiming that he just told 150 of his employees that they were losing their jobs because the PPP loan had not yet come through, and that he had “watched grown men and women crying.” Choi wrote in that same email that he “sincerely hope[d]” that the lender’s employee “would never find [himself] in this kind of situation.”

Based on Choi’s alleged misrepresentations, three of the four lenders funded three businesses with an approximately $3 million PPP loan each. Choi received a total of nearly $9 million in federal COVID-19 emergency relief funds meant for distressed small businesses.

Choi used the fraudulently obtained PPP loan proceeds to pay for numerous personal expenses, including to buy a nearly $1 million home in Cresskill, New Jersey, fund approximately $30,000 in remodeling and other improvements, and invest millions more in the stock market through an account held in the name of his spouse.  

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

This case was investigated by IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn; the Small Business Administration Office of the Inspector General; and the Social Security Administration – Office of the Inspector General.

The government is represented by Assistant U.S. Attorney Andrew Macurdy of the District of New Jersey and Trial Attorney Andrew Tyler of the Fraud Section of the Department of Justice, Criminal Division.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

The charges and allegations in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty in a court of law.

NEWARK, N.J. – The U.S. Attorney’s Office for the District of New Jersey today announced an agreement with the Borough of Woodcliff Lake, New Jersey, to resolve allegations that the Borough violated the Religious Land Use and Institutionalized Persons Act (RLUIPA) by denying zoning approval for an Orthodox Jewish congregation to construct a  worship center on its property. 

The proposed consent decree, which was filed today in the U.S. District Court of the District of New Jersey and must still be approved by the Court, would resolve a lawsuit filed by the United States against the borough, which alleged that the borough had prevented Valley Chabad, an Orthodox Jewish congregation that has worshipped in the borough for over 20 years, from constructing a new house of worship. A separate settlement agreement and proposed consent decree have resolved a related lawsuit filed by Valley Chabad against the borough.  

“RLUIPA protects the rights of every religious community to worship free of unlawful burdens,” U.S. Attorney Craig Carpenito, District of New Jersey, said. “As our office continues to vigorously protect the civil rights of the Jewish community and all religious communities in our District, we will use every tool at our disposal, including pursuing court-enforceable injunctive remedies. Through our actions today, we have taken steps to ensure that Valley Chabad and its members will no longer face unlawful barriers in their practice of religion.”

“For more than four centuries, religious people from all over the world have sought refuge here,” Assistant Attorney General Eric Dreiband of the Civil Rights Division said. “Often, these people did so to escape persecution by monarchs, dictators, and other despots. Then, when our ancestors established the United States of America, the Founders adopted the First Amendment to the United States Constitution and thereby enacted into law the right of all people to exercise religion. Two decades ago, the Congress extended these protections when it passed the Religious Land Use and Institutionalized Persons Act. That law protects religious people and their institutions from unduly burdensome or discriminatory land use regulations. The United States is, and must always remain, committed to the right of all people to practice their faith and worship together. The United States Department of Justice will continue to fight against any unlawful deprivation of the right of all people to practice their faith. As our ancestors did four centuries ago, today, religious people often gather and worship with those who share their faith. Through this agreement, the Valley Chabad and its members will be able to build a house of worship and to exercise their right to practice their religion freely.”

The complaint alleged that Woodcliff Lake violated RLUIPA by imposing a substantial burden on Valley Chabad’s religious exercise when, on three occasions between 2006 and 2013, Valley Chabad attempted to purchase parcels of property in the borough in order to construct a house of worship and meeting center, called a Chabad house, large enough to meet its needs. In each instance, the borough purchased or re-zoned the parcels, preventing development of a Chabad house. The complaint also alleges that this conduct and the borough’s eventual denial of Valley Chabad’s application for zoning relief to expand on its current property burdened Valley Chabad’s ability to worship freely without furthering a compelling government interest. 

As part of the consent decree, the borough will permit Valley Chabad to construct a new Chabad house on its property. The resolution would also enjoin the borough from acting in a manner that violates RLUIPA and require the borough to establish a procedure for receiving and resolving RLUIPA complaints, train its employees on RLUIPA’s requirements, and submit regular reports to the United States and the court on its compliance. In the separate agreement that resolves the related private action, the borough agreed to pay Valley Chabad $1.5 million to resolve its claims for damages and attorney’s fees that arose from the borough’s conduct.  

RLUIPA is a federal law that protects religious institutions from unduly burdensome or discriminatory land use regulations. In June 2018, the Justice Department announced its Place to Worship Initiative, which focuses on RLUIPA’s provisions that protect the rights of houses of worship and other religious institutions to worship on their land. More information is available at www.justice.gov/crt/placetoworship.

People who believe they have been subjected to discrimination in land use or zoning decisions may contact the U.S. Attorney’s Office Civil Rights Hotline at (855) 281-3339 or the Civil Rights Division Housing and Civil Enforcement Section at (800) 896-7743, or through the complaint portal on the Place to Worship Initiative website.  More information about RLUIPA, including questions and answers about the law and other documents, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php.

The government is represented by Assistant U.S. Attorney Michael E. Campion, Chief of the U.S. Attorney’s Office’s Civil Rights Unit, Civil Division and Assistant U.S. Attorney Susan Millenky, of the Civil Rights Unit, Civil Division.

TRENTON, N.J. – Two California men today admitted to participating in a conspiracy to broker patients as part of a multi-state patient scheme in which one of them directed recruiters to bribe drug-addicted individuals to enroll in drug rehabilitation and the other paid referral fees from his rehabilitation center in exchange for those patient referrals, U.S. Attorney Craig Carpenito announced.

Kevin M. Dickau, 32, of Tustin, California, and Dr. Akikur Mohammad, 57, of West Hills, California, each pleaded guilty by videoconference before U.S. District Judge Peter G. Sheridan. Dickau pleaded guilty to an information charging him with one count of conspiracy to commit health care fraud. Mohammad pleaded guilty to an information charging him with one count of conspiracy to violate the Eliminating Kickbacks in Recovery Act (EKRA).

EKRA, enacted by Congress in October 2018 as part of a broader package of legislation aimed at combatting the opioid crisis, bars the payment of kickbacks in exchange for the referral of patients to drug treatment facilities. Mohammad’s EKRA conviction is among the first such convictions in the country using the new charge.

Three other individuals have previously pleaded guilty for their roles in the scheme: Peter Costas, of Red Bank, New Jersey, pleaded guilty to conspiracy to commit health care fraud in May 2020; Seth Logan Welsh, of Forest Hill, Maryland, and John C. Devlin, of Baltimore, Maryland, pleaded guilty to the same charge on Sept. 8, 2020.

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

Dickau, Welsh, Devlin, and their conspirators owned and operated a marketing company in California. Dickau, Welsh, and Devlin used the marketing company to help orchestrate a scheme in New Jersey, Maryland, California, and other states that involved bribing individuals addicted to heroin and other drugs to enter into drug rehabilitation centers so Welsh, Devlin, and their conspirators could generate referral fees from those facilities. One facility in California that paid such referral fees was owned and operated by Mohammad.

The marketing company run by Dickau, Welsh, and Devlin maintained contractual relationships with drug treatment facilities around the country, including the one run by Mohammad. The marketing company also engaged a nationwide network of recruiters – including Costas in New Jersey – to identify and recruit potential patients, from New Jersey and other states, who were addicted to heroin or other drugs and who had robust private health insurance.

To convince drug-addicted individuals to travel to and enroll in rehabilitation when they otherwise would not have, Costas and other recruiters offered to bribe them – often as much as several thousand dollars – with the approval of Dickau, Welsh, and Devlin. Once the patients agreed to enroll in drug rehabilitation in exchange for the offered bribe, Dickau, Welsh, Devlin, and Costas would arrange and pay for cross-country travel to the drug treatment centers in California and other states, in concert with the owners of the facilities themselves, including Mohammad. Costas would stay in touch with the New Jersey patients at the facilities and specifically instruct them to stay at the facilities long enough to generate referral payments, and he would pass along information to Dickau, Welsh, and Devlin about the patients’ status at the facilities. Dickau, Welsh, and Devlin would monitor the other patients they brokered by speaking to other recruiters or to the owners and employees of the drug treatment facilities themselves.

Mohammad’s drug treatment facility had a contract with the marketing company.  Mohammad’s facility and other facilities typically paid the marketing company a fee of $5,000 to $10,000 per patient referral. Dickau, Welsh, Devlin, and their conspirators divvied that money among themselves. Costas and other recruiters received approximately half that amount for each patient they brokered. Dickau, Welsh, Devlin, and their conspirators brokered scores of patients to drug treatment facilities around the country, including the one run by Mohammad, and the conspiracy caused millions of dollars of losses for health insurers.

For example, on Jan. 24, 2019, Mohammad, Welsh, and Dickau had a text message conversation in which Dickau sent a patient’s biographical and health insurance information to Mohammad to see if Mohammad would accept the patient at his drug treatment facility. After confirming that the patient had adequate health insurance benefits, Mohammad accepted the patient for admission to his drug treatment facility. The patient enrolled at Mohammad’s drug treatment facility soon after, and Mohammad billed a commercial insurance company over $70,000 for purported services rendered to the patient. The following month. Mohammad paid the marketing company a referral payment of $5,000 for referring the patient.

In a telephone conversation on March 14, 2019, Mohammad and Welsh discussed kickbacks for referrals for two patients sent to Mohammad’s drug treatment facility. During the call, Mohammad and Welsh discussed how long each patient stayed at Mohammad’s drug treatment facility, and they agreed that Mohammad would pay Dickau and Welsh a kickback for the two patient referrals. On the same day, Mohammad wrote a check to the marketing company for $10,000.

Dickau faces a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Mohammad faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing for both defendants is scheduled for Jan. 20, 2021.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s guilty pleas. He also thanked the FBI, under the direction of Acting Assistant Director in Charge John F. Bennett in Los Angeles, California and the District Attorney’s Office in Orange County, California.

The government is represented by Senior Trial Counsel Jason S. Gould of the Health Care Fraud Unit in Newark.

TRENTON, N.J. – A Somerset County, New Jersey, man admitted today that he concealed his attempts to provide material support to Hamas, U.S. Attorney Craig Carpenito, Assistant Attorney General John C. Demers of the U.S. Department of Justice’s National Security Division, FBI-Newark Special Agent in Charge George M. Crouch Jr., and FBI Assistant Director for Counterterrorism Jill Sanborn announced.

Jonathan Xie, 21, of Basking Ridge, New Jersey, pleaded guilty by videoconference before U.S. District Judge Michael A. Shipp to an information charging him with one count of concealing attempts to provide material support to a designated foreign terrorist organization. 

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

Xie admitted that he knowingly concealed and disguised the nature, location, source, ownership and control of the attempt to provide material support and resources to Harakat al-Muqawamah al-Islamiyya and the Islamic Resistance Movement, an organization that is commonly referred to as Hamas. Xie admitted that he knew Hamas was a designated foreign terrorist organization and has engaged in terrorist activities. He said he attempted to conceal the attempted support believing it would be used to commit or assist in the commission of a violent act.

In December 2018, Xie sent $100 via Moneygram to an individual in Gaza who Xie believed to be a member of the Al-Qassam Brigades – a faction of Hamas that has conducted attacks, to include suicide bombings against civilian targets inside Israel. At approximately the same time that Xie sent the money, he posted on his Instagram account “Just donated $100 to Hamas. Pretty sure it was illegal but I don’t give a damn.”

In April 2019, Xie appeared in an Instagram Live video wearing a black ski mask and stated that he was against Zionism and the neo-liberal establishment. When asked by another participant in the video if he would go to Gaza and join Hamas, Xie stated “yes, If I could find a way.” Later in the video, Xie displayed a Hamas flag and retrieved a handgun. He then stated “I’m gonna go to the [expletive] pro-Israel march and I’m going to shoot everybody.” In subsequent Instagram posts, Xie stated, “I want to shoot the pro-israel demonstrators . . .  you can get a gun and shoot your way through or use a vehicle and ram people . . . all you need is a gun or vehicle to go on a rampage . . . I do not care if security forces come after me, they will have to put a bullet in my head to stop me.”

In April 2019, Xie sent a link to a website for the Al-Qassam Brigades to an FBI employee who was acting online in an undercover capacity. Xie described the website as a “Hamas” website and stated he had previously sent a donation to the group. Xie then sent screenshots of the website to the undercover employee and demonstrated how to use a new feature on the website that allows donations to be sent via Bitcoin.  On April 18, 2019, when the undercover employee asked whether Bitcoin was anonymous, Xie responded:  “yah… i think that's why hamas is using it now because money transfer is not that anonymous.” 

The count of concealing attempted material support carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing for Xie is scheduled for Jan. 27, 2021. 

U.S. Attorney Carpenito and Assistant Attorney General Demers credited special agents of the FBI and task force officers of the Joint Terrorism Task Force, under the direction of Special Agent in Charge Crouch, Jr.; and the U.S. Department of Defense, Army Counterintelligence, 902d Military Intelligence Group, with the investigation leading to today’s guilty plea. He also thanks the U.S. Secret Service for its assistance with the case.

The government is represented by Senior Trial Counsel Joyce M. Malliet of the U.S. Attorney’s Office’s National Security Unit and Trial Attorney Taryn Meeks of the U.S. Department of Justice’s Counterterrorism Section of the National Security Division.

A Somerset County, New Jersey, man admitted today that he concealed his attempts to provide material support to Hamas, Assistant Attorney General John C. Demers of the U.S. Department of Justice’s National Security Division, U.S. Attorney Craig Carpenito, FBI-Newark Special Agent in Charge George M. Crouch Jr., and FBI Assistant Director for Counterterrorism Jill Sanborn announced.

Jonathan Xie, 21, of Basking Ridge, New Jersey, pleaded guilty by videoconference before U.S. District Judge Michael A. Shipp to an information charging him with one count of concealing attempts to provide material support to a designated foreign terrorist organization. 

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

Xie admitted that he knowingly concealed and disguised the nature, location, source, ownership and control of the attempt to provide material support and resources to Harakat al-Muqawamah al-Islamiyya and the Islamic Resistance Movement, an organization that is commonly referred to as Hamas. Xie admitted that he knew Hamas was a designated foreign terrorist organization and has engaged in terrorist activities. He said he attempted to conceal the attempted support believing it would be used to commit or assist in the commission of a violent act.

In December 2018, Xie sent $100 via Moneygram to an individual in Gaza who Xie believed to be a member of the Al-Qassam Brigades – a faction of Hamas that has conducted attacks, to include suicide bombings against civilian targets inside Israel. At approximately the same time that Xie sent the money, he posted on his Instagram account “Just donated $100 to Hamas. Pretty sure it was illegal but I don’t give a damn.”

In April 2019, Xie appeared in an Instagram Live video wearing a black ski mask and stated that he was against Zionism and the neo-liberal establishment. When asked by another participant in the video if he would go to Gaza and join Hamas, Xie stated “yes, If I could find a way.” Later in the video, Xie displayed a Hamas flag and retrieved a handgun. He then stated “I’m gonna go to the [expletive] pro-Israel march and I’m going to shoot everybody.” In subsequent Instagram posts, Xie stated, “I want to shoot the pro-israel demonstrators . . .  you can get a gun and shoot your way through or use a vehicle and ram people . . . all you need is a gun or vehicle to go on a rampage . . . I do not care if security forces come after me, they will have to put a bullet in my head to stop me.”

In April 2019, Xie sent a link to a website for the Al-Qassam Brigades to an FBI employee who was acting online in an undercover capacity. Xie described the website as a “Hamas” website and stated he had previously sent a donation to the group. Xie then sent screenshots of the website to the undercover employee and demonstrated how to use a new feature on the website that allows donations to be sent via Bitcoin.  On April 18, 2019, when the undercover employee asked whether Bitcoin was anonymous, Xie responded:  “yah… i think that's why hamas is using it now because money transfer is not that anonymous.” 

The investigation revealed additional social media accounts for Xie, including a YouTube account which contained, among other things, a playlist containing videos, many of which advocated or propagandized Soldiers for Allah, the war in Syria, Hezbollah (a foreign terrorist organization), and the Houthi movement in Yemen, as well as support for Bashar al Assad, Saddam Hussein, and North Korea.

The count of concealing attempted material support carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing for Xie is scheduled for Jan. 27, 2021. 

Assistant Attorney General Demers and U.S. Attorney Carpenito credited special agents of the FBI and task force officers of the Joint Terrorism Task Force, under the direction of Special Agent in Charge Crouch, Jr.; and the U.S. Department of Defense, Army Counterintelligence, 902d Military Intelligence Group, with the investigation leading to today’s guilty plea. He also thanks the U.S. Secret Service for its assistance with the case.

The government is represented by Senior Trial Counsel Joyce M. Malliet of the U.S. Attorney’s Office’s National Security Unit and Trial Attorney Taryn Meeks of the U.S. Department of Justice’s Counterterrorism Section of the National Security Division.

NEWARK, N.J. – The president of a now-defunct New Jersey-based marble and granite wholesaler today admitted his role in orchestrating and carrying out a scheme to defraud a bank in connection with a $17 million secured line of credit, U.S. Attorney Craig Carpenito announced.

Rajendra Kankariya, 61, of Tenafly, New Jersey, pleaded guilty by videoconference before U.S. District Judge Susan D. Wigenton to an information charging him with one count of conspiracy to commit wire fraud affecting a financial institution.

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

From March 2016 through March 2018, Kankariya, the president and part owner of Lotus Exim International Inc. (LEI), conspired with other LEI employees to obtain from the victim bank a $17 million line of credit by fraudulent means. The victim bank extended LEI the line of credit, believing it to have been secured in part by LEI’s accounts receivable. In reality, Kankariya and his conspirators had fabricated or inflated many of the accounts receivable, ultimately leading to LEI defaulting on the line of credit.

In order to conceal the lack of sufficient collateral, LEI employees, with the knowledge and approval of Kankariya, created fake email addresses on behalf of LEI’s customers so they could pose as those customers and answer the victim bank’s and outside auditor’s inquiries about the accounts receivable. The scheme involved numerous fraudulent accounts receivable where the outstanding balances were either inflated or entirely fabricated. The scheme caused the victim bank losses of approximately $17 million.

The count of conspiracy to commit wire fraud affecting a financial institution to which Kankariya pleaded guilty carries a maximum potential penalty of 30 years in prison and a fine of $1 million. Kankariya is scheduled to be sentenced on Jan. 18, 2021.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s guilty plea.

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

NEWARK, N.J. – A Newark man and associate of the street gang known as the “Famous Boyz” was sentenced today to 98 months in prison for conspiring to distribute crack cocaine and possessing with the intent to distribute crack cocaine and cocaine, U.S. Attorney Craig Carpenito announced.  

Jonathan Garcia, a/k/a “Bebo,” 36, previously pleaded guilty via videoconference before U.S. District Judge Madeline Cox Arleo to an information charging him with conspiring to distribute 28 grams or more of crack cocaine, and distributing and possessing with intent to distribute cocaine and crack cocaine. Judge Arleo imposed the sentence today by videoconference.     

Saeed Dawes, a/k/a “Nasty,” 22, of Newark, was sentenced on Aug. 12, 2020, via videoconference by Judge Arleo to 57 months in prison and three years of supervised release.  Dawes previously pleaded guilty before Judge Arleo to an information charging him with one count of conspiring to distribute crack cocaine and heroin.

Jonathan Hernandez, 25, of Newark, pleaded guilty on Aug. 26, 2020, before Judge Arleo in Newark federal court to a superseding information charging him with one count of conspiring to distribute crack cocaine and one count of possessing with the intent to distribute crack cocaine.   

In October 2018, Garcia, Hernandez, and Dawes, along with 13 other members of a violent drug trafficking conspiracy operating in Newark, were charged by criminal complaint after a lengthy wiretap investigation with conspiracy to distribute crack cocaine and heroin.  Shaka McKinney and Jahid Vauters, a/k/a “K,” a/k/a “KO,” also were charged with firearms possession offenses. To date, 14 of the defendants have pleaded guilty to drug and/or firearm charges and seven await sentencing. 

On Feb. 25, 2019, a grand jury returned a one-count indictment charging three of the defendants, Patricio Hernandez, Jonathan Hernandez, and Garcia, with conspiracy to distribute and to possess with intent to distribute 280 grams or more of crack cocaine for their alleged participation in supplying the “Famous Boyz” with cocaine.  On Sept. 30, 2019, a grand jury returned a 21-count superseding indictment against defendants Patricio Hernandez, Jonathan Hernandez, Garcia, Javon Holmes, a/k/a “J-Dot”, and John Mosley, a/k/a “Breezy,” a/k/a “Brazy.” The charges in the superseding indictment remain pending against the remaining defendants. 

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

The defendants are members and associates of the Famous Boyz – a subset of the Brick City Brim set of the Bloods street gang – which dealt significant quantities of heroin and crack-cocaine, primarily around the area of South 18th Street and 15th Avenue, in Newark.  The gang often referred to this area as the “8 Block,” “18th,” or simply by reference to the number “8”. 

Mosley was a primary source of narcotics for the Famous Boyz and often directed the gang’s drug operations. Mosley and other members of the Famous Boyz shared narcotics, customers, and firearms with one another in furtherance of their narcotics-trafficking activities, and they used juveniles to distribute narcotics and stash firearms. Patricio Hernandez and Jonathan Hernandez were among the main suppliers of crack cocaine to Mosley, while Vauters supplied Mosley with heroin. Heroin sold by Famous Boyz members, including Dawes, Karen Armstrong and Eugene Williams, contained a fentanyl analogue, which is an extremely dangerous and highly-addictive substance. 

Members of the Famous Boyz also used social media to promote the gang’s criminal activities, including by advertising their narcotics-trafficking activities and proceeds and by threatening both rival gang members and any individuals who consider cooperating with law enforcement. Those members who sold narcotics also enriched themselves by committing other crimes, including robberies. Law enforcement, acting on information obtained from a wiretap, arrested West while he was attempting to commit a robbery. After law enforcement seized a .40 caliber firearm from the scene, Mosley was overheard complaining to Holmes, “so all the ratchets gone” and “damn we just lost all the straps,” referring to the Famous Boyz losing their firearms.

In addition to the prison term, Garcia was sentenced to four years of supervised release.

U.S. Attorney Carpenito credited special agents of ATF, under the direction of Special Agent in Charge Charlie J. Patterson in Newark, and members of the Newark Department of Public Safety, under the direction of Public Safety Director Anthony Ambrose, with the investigation leading to the charges and convictions.

He also thanked the DEA, under the direction of Special Agent in Charge Susan A. Gibson, the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Theodore N. Stephens II, the Essex County Sheriff’s Office, under the direction of Sheriff Armando B. Fontoura, the N.J. State Police, under the direction of Col. Patrick J. Callahan, the Belleville Police Department, under the direction of Chief Mark Minichini, and the Livingston Police Department, under the direction of Chief Gary Marshuetz for their assistance.

This case is being conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and is part of the Violent Crime Initiative (VCI) in Newark. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. The VCI was formed in August 2017 by the U.S. Attorney’s Office for the District of New Jersey, the Essex County Prosecutor’s Office, and the City of Newark’s Department of Public Safety to combat violent crime in and around Newark. As part of this partnership, federal, state, county, and city agencies collaborate and pool resources to prosecute violent offenders who endanger the safety of the community. The VCI is composed of the U.S. Attorney’s Office, the FBI, the ATF, the DEA New Jersey Division, the U.S. Marshals, the Newark Department of Public Safety, the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, N.J. State Board of Parole, Union County Jail, N.J. State Police Regional Operations and Intelligence Center/Real Time Crime Center, N.J. Department of Corrections, the East Orange Police Department, and the Irvington Police Department. 

The government is represented by Deputy Chief of the Criminal Division Mary E. Toscano and Assistant U.S. Attorney Angelica M. Sinopole of the U.S. Attorney’s Office’s Organized Crime and Gangs Unit in Newark.

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

The Justice Department today announced an agreement with the Borough of Woodcliff Lake, New Jersey, to resolve allegations that the Borough violated the Religious Land Use and Institutionalized Persons Act (RLUIPA) by denying zoning approval for an Orthodox Jewish congregation to construct a worship center on its property. 

The proposed consent decree, which was filed today in the U.S. District Court of the District of New Jersey and must still be approved by the court, would resolve a lawsuit filed by the United States against the Borough, which alleged that the Borough had prevented Valley Chabad, an Orthodox Jewish congregation that has worshiped in the borough for over 20 years, from constructing a new house of worship. A separate settlement agreement and proposed consent decree have resolved a related lawsuit filed by Valley Chabad against the borough.  

“For more than four centuries, religious people from all over the world have sought refuge here,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “Often, these people did so to escape persecution by monarchs, dictators, and other despots. Then, when our ancestors established the United States of America, the Founders adopted the First Amendment to the U.S. Constitution and thereby enacted into law the right of all people to exercise religion. Two decades ago, the Congress extended these protections when it passed the Religious Land Use and Institutionalized Persons Act. That law protects religious people and their institutions from unduly burdensome or discriminatory land use regulations. The United States is, and must always remain, committed to the right of all people to practice their faith and worship together. The U.S. Department of Justice will continue to fight against any unlawful deprivation of the right of all people to practice their faith. As our ancestors did four centuries ago, today, religious people often gather and worship with those who share their faith. Through this agreement, the Valley Chabad and its members will be able to build a house of worship and to exercise their right to practice their religion freely.”

“RLUIPA protects the rights of every religious community to worship free of unlawful burdens,” said U.S. Attorney Craig Carpenito, District of New Jersey. “As our office continues to vigorously protect the civil rights of the Jewish community and all religious communities in our district, we will use every tool at our disposal, including pursuing court-enforceable injunctive remedies. Through our actions today, we have taken steps to ensure that Valley Chabad and its members will no longer face unlawful barriers in their practice of religion.”

The complaint alleged that Woodcliff Lake violated RLUIPA by imposing a substantial burden on Valley Chabad’s religious exercise when, on three occasions between 2006 and 2013, Valley Chabad attempted to purchase parcels of property in the borough in order to construct a house of worship and meeting center, called a Chabad house, large enough to meet its needs. In each instance, the borough purchased or re-zoned the parcels, preventing development of a Chabad house. The complaint also alleges that this conduct and the borough’s eventual denial of Valley Chabad’s application for zoning relief to expand on its current property burdened Valley Chabad’s ability to worship freely without furthering a compelling government interest. 

As part of the consent decree, the borough will permit Valley Chabad to construct a new Chabad house on its property. The resolution would also enjoin the borough from acting in a manner that violates RLUIPA and require the borough to establish a procedure for receiving and resolving RLUIPA complaints, train its employees on RLUIPA’s requirements, and submit regular reports to the United States and the court on its compliance. In the separate agreement that resolves the related private action, the borough agreed to pay Valley Chabad $1.5 million to resolve its claims for damages and attorney’s fees that arose from the borough’s conduct.  

RLUIPA is a federal law that protects religious institutions from unduly burdensome or discriminatory land use regulations. In June 2018, the Justice Department announced its Place to Worship Initiative, which focuses on RLUIPA’s provisions that protect the rights of houses of worship and other religious institutions to worship on their land. More information is available at www.justice.gov/crt/placetoworship.

People who believe they have been subjected to discrimination in land use or zoning decisions may contact the U.S. Attorney’s Office Civil Rights Hotline at (855) 281-3339 or the Civil Rights Division Housing and Civil Enforcement Section at (800) 896-7743, or through the complaint portal on the Place to Worship Initiative website. More information about RLUIPA, including questions and answers about the law and other documents, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php.

The government is represented by Assistant U.S. Attorney Michael E. Campion, Chief of the U.S. Attorney’s Office’s Civil Rights Unit, Civil Division and Assistant U.S. Attorney Susan Millenky of the Civil Rights Unit, Civil Division.

NEWARK, N.J. – Seven members of the U.S. Attorney’s Office, District of New Jersey, are among those who were honored by the Department of Justice’s 36th Annual Director’s Awards this year, U.S. Attorney Craig Carpenito announced today.

Executive Assistant U.S. Attorney Rahul Agarwal received a Director’s Award for Superior Performance in the Criminal Division. AUSA Agarwal led the investigation and prosecution of seven Paterson, New Jersey, police officers for crimes including the brutal assault of a suicidal hospital patient; the distribution and sale of narcotics; unlawful vehicle stops, searches, and seizures; unlawful use of force; and the theft and extortion of money and property from Paterson residents. His work, which was described in the local press as “a story of the justice system working,” is an example of the important role that the Department of Justice continues to play in maintaining public trust in our local police departments and in ensuring that every community receives the commitment to public safety to which it is entitled.  

Assistant U.S. Attorneys Michael Campion, Chief of the office’s Civil Rights Unit, and Kelly Horan Florio, a member of that unit, each received a Director’s Award for Superior Performance in the Civil Division, for their productive and successful affirmative civil enforcement practice. Collaborating with DOJ’s Civil Rights Division and other Department of Justice colleagues, they zealously pursue and obtain justice on behalf of those who have been deprived of their civil rights. Among other causes, they have fought for the rights of military personnel under the Servicemembers Civil Relief Act, the disabled and mobility-impaired under the Americans with Disabilities Act, the imprisoned under the Civil Rights of Institutionalized Persons Act, victims of discrimination under the Civil Rights Act and the Fair Housing Act, and persons of faith under the Religious Land Use Institutionalized Persons Act. As recognized experts in civil rights, they are frequent speakers at events across New Jersey, educating the public about civil rights and the Department's notable civil rights initiatives, including the Department's Initiative to Combat Sexual Harassment in Housing, Place of Worship Initiative and the Servicemembers and Veterans Initiative.  

A team comprised of nine attorneys and eLitigation professionals from the U.S. Attorney’s Office and the Executive Office for U.S. Attorneys (EOUSA) were honored for their cooperative effort in overhauling the eLitigation practices and protocols for the District of New Jersey. The award recipients from the U.S. Attorney’s Office, Jason DeJesus, Sergey Gluzberg, Richard Jones, and AUSA Daniel Shapiro, formulated the Office’s standalone eLitigation Unit; improved the eLitigation competencies of paralegals; developed and automated a common folder structure for civil and criminal cases; instituted an electronic system for the generation and tracking of grand jury subpoenas; and adopted workflows for the intake, processing, review, and production of data. They were honored together with Susan Cooke, John Haried, Tonia Jones, Tammy Reno, and Virginia Vance from EOUSA, who provided exemplary support throughout the restructuring.

“Every day, the men and women who work in our office do their jobs with an extraordinary level of skill and professionalism,” U.S. Attorney Craig Carpenito, District of New Jersey, said. “That our work was recognized in three separate areas this year – criminal, civil and administrative – speaks to that dedication throughout every aspect of our work. I am particularly pleased that the Department this year recognized our office’s enduring commitment to protecting Americans’ civil rights through both affirmative civil enforcement and criminal investigation and prosecution. I congratulate all of the recipients on their achievements and am proud to call myself their colleague.”

The traditional ceremony held in the Great Hall at the Robert F. Kennedy Department of Justice Building had to be cancelled this year in response to the COVID-19 pandemic.

EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.

NEWARK, N.J. – A Middlesex County, New Jersey, corporation involved in consulting, technology and staffing and using primarily foreign nationals in the United States pursuant to H1-B visas has agreed to resolve allegations that it violated immigration and employment regulations concerning continuous employment and wage requirements, U.S. Attorney Craig Carpenito announced today.

The United States contended that from January 2014 through June 2018 many of Savantis Solutions LLC’s H-1B workers were not paid the required wage in regular intervals at the required wage rate throughout their period of employment. Savantis, based in Edison, New Jersey and formerly known as Vedicsoft Solutions LLC and Vedicsoft Holdings LLC, failed to properly pay many of its H-1B workers in conformance with their applications to the federal government and federal regulations. The United States also contended that Savantis improperly recruited H-1B workers by requesting that they provide security deposits to Savantis prior to Savantis submitting their H-1B Cap lottery applications.

The resolution requires the company to pay $345,365 in restitution, which will be used to pay back wages plus interest to employees and former employees of the company. Savantis cooperated in the investigation of the matter and undertook compliance efforts in response. Pursuant to the agreement, the company is also required to hire an outside law firm to serve as a monitor to ensure ongoing and continued compliance with the relevant rules and regulations for the next three years.

U.S. Attorney Carpenito credited special agents of the Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka; the U.S. Department of Homeland Security, Homeland Security Investigations, Newark Field Office, under the direction of Special Agent in Charge Jason Molina; the Department of Labor, Wage and Hour Division’s Southern New Jersey District Office under the direction of District Director, Charlene Rachor; and U.S. Citizenship and Immigration Services, Office of Fraud Detection and National Security, Vermont Service Center and Newark Field Office, leading to today’s resolution.

The government is represented by Assistant U.S. Attorney David E. Dauenheimer, Deputy Chief of the U.S. Attorney's Office’s Government Fraud Unit in Newark.

CAMDEN, N.J. – A Texas woman today admitted her role in a conspiracy to distribute heroin, U.S. Attorney Craig Carpenito announced.

Cristina Godinez, 36, of San Antonio, Texas, pleaded guilty by videoconference before U.S. District Judge Joseph H. Rodriguez to an information charging her with one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin.

Alba Lilia Diaz, 43, of Chicago, Illinois, a co-defendant, pleaded guilty July 28, 2020, to an information charging her with one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin.

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

On July 22, 2019, Diaz travelled to New Jersey to conduct a heroin sale. She provided a sample of heroin and agreed to deliver 15 kilograms of heroin several days later. On July 25, 2019, Diaz and Godinez drove to New Jersey from Chicago with the heroin in their vehicle. When they arrived in New Jersey, Godinez negotiated the sale while Diaz waited with the drugs in a hotel room. Once a price was agreed to, Diaz brought the heroin to the buyer’s car. Special agents from the Department of Homeland Security, Homeland Security Investigations (HSI) arrested the defendants and seized the drugs.

The conspiracy counts to which the defendants pleaded guilty carry a mandatory minimum term of 10 years in prison, a maximum of life in prison and a fine of $10 million, or twice the gross gain or loss caused by the offense. Sentencing for Godinez is scheduled for Jan. 19, 2021. Diaz is scheduled to be sentenced on Nov. 20, 2020.

U.S. Attorney Carpenito credited special agents of HSI, under the direction of Special Agent in Charge Jason Molina, with the investigation leading to the guilty pleas. He also thanked the Drug Enforcement Administration, the New Jersey State Police, the Camden County Prosecutor’s Office, and the Gloucester County HIDTA Task Force for their assistance with the case.

The government is represented by Assistant U.S. Attorney Andrew B. Johns of the Criminal Division in Camden.

NEWARK, N.J. – An Essex County, New Jersey, man previously convicted of multiple felonies admitted today to possessing a firearm and ammunition, U.S. Attorney Craig Carpenito announced.

Sharif Clarke, 38, of Irvington, New Jersey, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to a superseding indictment charging him with one count of possession of a firearm and ammunition by a convicted felon.

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

On Dec. 3, 2018, Clarke knowingly possessed a Glock .40-caliber handgun loaded with nine rounds of Remington ammunition. At that time, Clarke had previously been convicted in Essex County Superior Court of resisting and eluding arrest and of possession of a controlled substance on school property, both of which are felonies.

The charge to which Clarke pleaded guilty carries a maximum penalty of 10 years in prison and a fine of up to $250,000. Sentencing is scheduled for Jan. 21, 2020.

This case is part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws. Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local and tribal authorities in investigating and prosecuting gun crimes; improves information sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities. For more information about Project Guardian, please see https://www.justice.gov/projectguardian.

U.S. Attorney Carpenito credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Field Division, under the leadership of Special Agent in Charge Charlie J. Patterson, and the Newark Department of Public Safety, under the leadership of Public Safety Director Anthony F. Ambrose, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Sarah A. Sulkowski of the U.S. Attorney’s Office Cybercrime Unit in Newark.

NEWARK, N.J. – A Pittsburgh, Pennsylvania, man was indicted today on charges of possessing with intent to distribute fentanyl and cocaine, U.S. Attorney Craig Carpenito announced.

Kenswick Austin, 45, is charged with one count of possession with intent to distribute more than 400 grams of fentanyl and one count of possession with intent to distribute at least 500 grams of cocaine. Austin was previously charged by complaint on March 31, 2020.

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

Between March 13, 2020, and March 28, 2020, Austin participated in multiple meetings and telephone calls to arrange the shipment to New Jersey of a package containing controlled substances. On March 30, 2020, the package arrived at an agreed-upon location, and Austin accompanied several other individuals to take possession of it. After a trained narcotics detection canine alerted to the presence of narcotics, law enforcement searched the package pursuant to a federal search warrant and found it to contain approximately one kilogram each of substances confirmed by laboratory testing to be fentanyl and cocaine.

The charge of possession with intent to distribute more than 400 grams of fentanyl carries a minimum punishment of 10 years in prison, a maximum of life in prison, and a $10 million fine. The charge of possession with intent to distribute 500 grams or more of cocaine carries a minimum punishment of five years in prison, a maximum of 40 years in prison, and a $5 million fine.

U.S. Attorney Carpenito credited special agents and task force officers of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina, with the investigation leading to the charge. He also thanked the Bound Brook, New Jersey, Police Department, under the direction of Chief of Police Vito Bet, and the Somerset County Prosecutor’s Office’s Crime Suppression Unit, under the direction of Prosecutor Michael H. Robertson, for their assistance in the investigation.

The government is represented by Assistant U.S. Attorney Sarah A. Sulkowski of the Cybercrime Unit of the U.S. Attorney’s Office’s Criminal Division in Newark.

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

CAMDEN, N.J. – A federal grand jury has returned a 16-count indictment charging a physician and pharmaceutical sales representative with defrauding New Jersey state health benefits programs and other insurers out of more than $2.5 million by submitting fraudulent claims for medically unnecessary prescriptions, as well as unlawfully obtaining and disclosing individually identifiable patient health information protected by HIPAA, U.S. Attorney Craig Carpenito announced. 

Keith Ritson, 40, of Bayville, New Jersey, and Frank Alario, M.D., 63, of Delray Beach, Florida, are charged with conspiracy to commit health care fraud and wire fraud, as well as individual acts of health care fraud and wire fraud. Both men are charged with a second conspiracy to wrongfully obtain and disclose patients’ individually identifiable health information. Alario is additionally charged with making false statements in a health care matter, and Ritson faces additional charges of conspiring to commit money laundering and substantive counts of money laundering.

The cases are assigned to U.S. District Judge Robert B. Kugler in Camden. The indicted defendants are expected to make their initial appearances before U.S. Magistrate Judge Ann Marie Donio in Camden federal court via videoconference on Sept. 10, 2020.

According to the indictment:

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient is allergic to a dye or other ingredient.

The conspirators recruited individuals to obtain very expensive and medically unnecessary compounded medications from a Louisiana pharmacy, Central Rexall Drugs Inc. (Central Rexall). The conspirators learned that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, and vitamin combinations – would be reimbursed by insurance providers in amounts in the thousands of dollars for a one-month supply.

The conspirators also learned that some New Jersey state and local government and education employees, including teachers, police officers, and state troopers, had insurance coverage for these particular compound medications. An entity referred to in the indictment as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents, and other insurance plans.  The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey or the other insurance plans for the amounts paid.

In the first charged conspiracy, Ritson recruited individuals with prescription drug benefits administered by the Pharmacy Benefits Administrator to receive unnecessary compound medication prescriptions, which Alario signed without examining, speaking with, or establishing a physician-patient relationship with the patient. Alario sent a form to Central Rexall’s compliance program in which he falsely attested that he saw and spoke with patients in person and established a physician-patient relationship prior to prescribing Central Rexall medications. Ritson and Alario earmarked established patients of Alario’s medical practices who had insurance that covered the expensive compound medications. Alario prescribed the medications not for the patient’s need or request, but for the benefits he and Ritson stood to gain. The scheme caused the Pharmacy Benefits Administrator to pay over $2.5 million for the fraudulent prescriptions. For his role in the scheme, Ritson received a percentage of the amount that Central Rexall received from the Pharmacy Benefits Administrator for the medications, and Alario benefitted by receiving free meals, entertainment, travel, and other remuneration from Ritson. 

The indictment also charges Ritson and Alario with a separate scheme to wrongfully obtain and disclose individually identifiable patient health information for their own personal gain and commercial advantage. As a sales representative not affiliated with Alario’s medical practices, Ritson should not have had access to patients’ confidential information. However, since only certain insurances covered the compound medications promoted by Ritson, the defendants accessed patient files and other identifying information to ascertain patients’ insurance coverage. On at least one occasion, Ritson and Alario jointly accessed patient information on an office computer for the purpose of determining insurance coverage for the medications. Ritson also had access to parts of Alario’s office where patient information was stored or could be heard and observed, including employee-restricted areas with medical files, fax machines, and computers. Ritson was also frequently present in exam rooms during patient appointments with Alario for the purpose of promoting the compound medications, at which time Alario commonly introduced Ritson to his patients as his “nephew” or gave the impression that Ritson was affiliated with the medical practice.  By being present during the patient exams, Ritson had access to patients’ medical files and protected health information.

The health care fraud and wire fraud conspiracy count carries a maximum potential penalty of 20 years in prison; each wire fraud count carries a maximum potential penalty of 20 years in prison; each health care fraud count carries a maximum penalty of 10 years in prison; the false statement count and the conspiracy to wrongfully obtain or disclose individually identifiable patient health information count each carry a maximum penalty of five years in prison; and the money laundering charges carry a maximum penalty of 10 years in prison. All of the offenses are also each punishable by a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater.

U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and the U.S. Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka, with the investigation leading to the indictment. He also thanked the Division of Pensions and Financial Transactions in the State Attorney General’s Office, under the direction of Attorney General Gurbir S. Grewal and Division Chief Aimee Nason, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorneys Christina O. Hud and R. David Walk Jr. of the U.S. Attorney’s Office in Camden.

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

NEWARK, N.J. – Two Essex County, New Jersey, men – a compliance safety and health officer (CSHO) with the U.S. Department of Labor, Occupational Safety and Health Administration (OSHA) and his brother – are scheduled to appear today on charges that they conspired to extort $6,000 in cash from a general contractor, U.S. Attorney Craig Carpenito announced.

Alvaro Idrovo, 44, of Bloomfield, New Jersey, and Paul Idrovo, a/k/a “Jose Diaz,” 46, of Nutley, New Jersey, are charged by complaint with knowingly and intentionally conspiring to commit an offense against the United States, specifically to commit an act of extortion under color of Alvaro Idrovo’s office or employment with OSHA. The defendants are scheduled to appear later today by videoconference before U.S. Magistrate Judge Leda Dunn Wettre. 

According to the complaint:

Alvaro Idrovo was assigned to investigate an anonymous complaint concerning the misuse of an extension ladder at a North Bergen work site of Company 1. He told Individual 1, the owner of Company 1, that Individual 1 was in violation of OSHA regulations for not having the necessary safety training certificates for Company 1’s workers to be on ladders at the work site. Alvaro Idrovo falsely advised Individual 1 that he needed to obtain training certificates with a specific vendor named “Jose Diaz” or Individual 1 would be subject to exorbitant fines and possible arrest for the violation.

Individual 1 contacted the phone number supplied by Alvaro Idrovo, which actually belonged to Paul Idrovo, posing as “Jose Diaz,” who told Individual 1 that the required OSHA training certificates would cost $13,000 in cash and repeated Alvaro Idrovo’s false assertions that if Individual 1 did not get the training certificates that Individual 1 would be in big trouble with OSHA, including big fines and possible jail. In follow-up telephone conversations with Paul Idrovo, Individual 1 was able to negotiate the fee down to $6,000 in cash.

When OSHA officials learned of Idrovo’s attempt to extort Individual 1 while questioning Individual 1 on an unrelated matter, the OSHA officials referred the matter to federal law enforcement officials, who arranged for Individual 1 to make consensual recordings with both Alvaro and Paul Idrovo. During an April meeting surveilled by law enforcement, Individual 1 paid Paul Idrovo $6,000 in cash in exchange for ladder and safety awareness training certificates and a safety and health plan. Alvaro Idrovo thereafter attached copies of the training certificates and the plan to his OSHA reports regarding Company 1’s violation despite knowing that the training certificates falsely claimed that training had been provided to the noted individuals in March 2020, “Jose Diaz” had provided training, and the alleged training was OSHA certified.  

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

U.S. Attorney Carpenito credited special agents of the U.S. Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Michael C. Mikulka in New York, and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to the charges.

The government is represented by Senior Trial Counsel Leslie Faye Schwartz, of the United States Attorney’s Office’s Special Prosecutions Division.

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

TRENTON, N.J. – A Duluth City, Georgia, man was sentenced today to 61 months in prison for his role in a conspiracy to hijack the credit card accounts of multiple victims in order to fraudulently purchase hundreds of thousands of dollars in gift cards and high-end products, U.S. Attorney Craig Carpenito announced.

Akintunde Adeyemi, 35, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an indictment charging him with one count of conspiring to commit bank fraud and one count of aggravated identity theft. Judge Sheridan imposed the sentence by videoconference today.

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

From July 2016 through May 2017, Adeyemi and others participated in a “credit card takeover” conspiracy to obtain control of credit card accounts by using stolen personal information to apply for compromised credit cards. Upon credit approval, Adeyemi provided his conspirators with fake government identifications and the account information to retrieve the credit cards associated with the compromised accounts. Adeyemi directed conspirators to use the compromised credit card accounts to purchase gift cards and high-value items, such computer tablets, cell phones, and other electronic devices, throughout New Jersey and Georgia. The scheme caused over $600,000 in losses to financial institutions who issued the credit cards. Two of Adeyemi’s co-conspirators, Oluwaseun Jato and Funmilola Adekanmi, have also pleaded guilty to participating in the scheme and are scheduled to be sentenced on Oct. 7, 2020.

In addition to the prison term, Judge Sheridan sentenced Adeyemi to five years of supervised release and ordered him to pay restitution to be determined at a later date.

U.S. Attorney Carpenito credited inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, and special agents of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina, with the investigation leading to today’s sentencing. 

The government is represented by Assistant U.S. Attorneys Ray Mateo of the Criminal Division in Trenton, and Nicholas Grippo, Deputy Chief of the Criminal Division in Newark.

TRENTON, N.J. – Two Maryland men today admitted participating in a conspiracy to defraud health insurance companies through a multi-state patient brokering scheme in which they directed recruiters to bribe drug-addicted individuals to enroll in drug rehabilitation in exchange for referral fees from the rehabilitation centers, U.S. Attorney Craig Carpenito announced.

Seth Logan Welsh, 26, of Forest Hill, Maryland, and John C. Devlin, 33, of Baltimore, Maryland, each pleaded guilty by teleconference before U.S. District Judge Peter G. Sheridan to separate informations charging them with one count of conspiracy to commit health care fraud.

Peter Costas, of Red Bank, New Jersey, pleaded guilty to the same charge in May 2020.

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

Welsh, Devlin, and their conspirators owned and operated a marketing company in California. Welsh and Devlin used the marketing company to help orchestrate a scheme in New Jersey, Maryland, California, and other states that involved bribing individuals addicted to heroin and other drugs to enter into drug rehabilitation centers so Welsh, Devlin, and their conspirators could generate referral fees from those facilities.

The marketing company maintained contractual relationships with drug treatment facilities around the country and engaged a nationwide network of recruiters – including Costas in New Jersey – to identify and recruit potential patients, from New Jersey and other states, who were addicted to heroin or other drugs and who had robust private health insurance.

To convince drug-addicted individuals to travel to and enroll in rehabilitation when they otherwise would not have, Costas and other recruiters offered to bribe them – often as much as several thousand dollars – with Welsh’s and Devlin’s approval. Once the patients agreed to enroll in drug rehabilitation in exchange for the offered bribe, Welsh, Devlin, and Costas would arrange and pay for cross-country travel to the drug treatment centers in California and other states. Costas would stay in touch with the New Jersey patients at the facilities and specifically instruct them to stay at the facilities long enough to generate referral payments, and he would pass along information to Welsh and Devlin about the patients’ status at the facilities. Welsh and Devlin would monitor the other patients they brokered by speaking to other recruiters or to the owners and employees of the drug treatment facilities themselves.

Welsh, Devlin, Costas, and their conspirators often directed patients to different rehabilitation facilities month after month to generate multiple referral payments without regard to whether the substance abuse treatment was medically necessary or effective.

Welsh, Devlin, Costas, and their conspirators also sent patients to facilities in California and other states that they knew provided ineffective drug treatment or actually fostered drug use on their premises. After sending one patient to a drug treatment facility in Los Angeles, California, the patient reported to Costas that “everyone’s high” that “it’s a flop,” meaning that it was not a legitimate substance abuse treatment facility providing bona fide drug treatment services. When that information was relayed to Devlin in a text message, he responded “Lol.” A few days later, Welsh texted Devlin and Costas to report that the patient was “smoking meth” at the drug treatment facility. Costas replied, “Yes. [The patient is] freaking out at me. [He] said out of the 10 ppl. [people] in [the drug treatment facility] only 4 are sober. The rest are smoking meth and dope . . . .  [The patient] said everyone’s high and it’s a complete flop and [he] tried to stay sober around it without ‘ratting’ as long as he could.” Costas’s text message meant that the patient was trying to stay in drug rehabilitation long enough to trigger referral payments to Welsh’s and Devlin’s marketing company without relapsing.

The facilities typically paid Welsh’s and Devlin’s marketing company a fee of $5,000 to $10,000 per patient referral. Welsh, Devlin, and their conspirators shared that money among themselves. Costas and other recruiters received approximately half that amount for each patient they brokered. During the scheme, Welsh, Devlin, and their conspirators brokered scores of patients to drug treatment facilities around the country, and the conspiracy caused millions of dollars of losses for health insurers.

Welsh and Devlin face a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Jan. 11, 2021.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s guilty pleas.

The government is represented by Senior Trial Counsel Jason S. Gould of the Health Care Fraud Unit in Newark.

TRENTON, N.J. – A Union County, New Jersey, man today was sentenced to 120 months in prison for his role as the supplier of large quantities of heroin and cocaine in a narcotics trafficking conspiracy in the Bayshore area of Monmouth and Middlesex counties, U.S. Attorney Craig Carpenito announced today.

Gregory Gillens, 47, of Hillside, New Jersey, previously pleaded guilty before U.S. District Judge Brian R. Martinotti in Trenton federal court to an information charging him with one count of conspiracy to distribute and possess with intent to distribute more than one kilogram of heroin. Gillens also admitted to conspiring to distribute and possess with intent to distribute a quantity of cocaine. Judge Martinotti imposed the sentence today via videoconference.

Today’s sentence follows a coordinated takedown in November 2018 of 15 defendants charged in a federal criminal complaint with conspiracy to distribute heroin and cocaine. To date, 12 defendants have pleaded guilty, including lead defendant Guy Jackson. Defendant Deberal Rogers has been indicted.

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

From May 2017 to November 2018, Gillens and others engaged in a narcotics conspiracy that operated in the Raritan Bayshore region of Middlesex and northern Monmouth counties.

Through the interception of telephone calls and text messages pursuant to court-authorized wiretap orders, controlled purchases of heroin and cocaine, the use of confidential sources of information, and other investigative techniques, law enforcement officers learned that Gillens regularly supplied large quantities of heroin and cocaine for further distribution, including to co-defendant Jackson. Some of the heroin distributed by the conspiracy contained fentanyl, a dangerous synthetic opioid.

Pursuant to search warrants executed on the day of Gillens’ arrest or soon thereafter, law enforcement recovered more than $96,000 in cash and more than 600 grams of cocaine from Gillens’ former residence and from inside a vehicle he had previously used to deal narcotics.  The vehicle and the cash have been administratively forfeited to the United States.

In addition to the prison term, Judge Martinotti sentenced Gillens to five years of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Red Bank Resident Agency, Jersey Shore Gang and Criminal Organization Task Force (including representatives from the Bradley Beach Police Department, Brick Police Department, Howell Police Department, Marlboro Police Department, Monmouth County Sheriff's Office, Toms River Police Department, and Union Beach Police Department) under the direction of Special Agent in Charge George M. Crouch Jr.; special agents of the FBI, Philadelphia Division, Scranton Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll; the New Jersey State Police, under the direction of Col. Patrick J. Callahan, Superintendent; the Matawan Police Department, under the direction of Chief Thomas J. Falco, Jr.; the Holmdel Police Department, under the direction of Chief John Mioduszewski; the Highlands Police Department, under the direction of Chief Robert Burton; the Monmouth County Prosecutor’s Office, under the direction of Prosecutor Christopher J. Gramiccioni; the Old Bridge Police Department, under the direction of Chief William A. Volkert; the Keansburg Police Department, under the direction of Chief James K. Pigott; the Hazlet Police Department, under the direction of Chief Philip Meehan; and the Aberdeen Police Department, under the direction of Chief Richard A. Derechailo, with the investigation leading to today’s sentencing. 

The government is represented by Assistant U.S. Attorney Elisa T. Wiygul of the U.S. Attorney’s Office’s Criminal Division in Trenton.

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

NEWARK, N.J. – A Paterson, New Jersey, woman was arrested today in connection with her alleged role in a conspiracy to distribute heroin and fentanyl in New Jersey and Vermont, U.S. Attorney Craig Carpenito announced. 

Nysifah Deaveareaux, 27, is charged by criminal complaint with conspiracy to distribute 40 grams or more of fentanyl and 100 grams or more of heroin. She is scheduled to make her initial court appearance today by videoconference before U.S. Magistrate Judge James B. Clark III.

Caron J. Abrams, 26, of Paterson, was charged by criminal complaint on Aug.14, 2020, with possession with intent to distribute 40 grams or more of fentanyl. He appeared by videoconference before the U.S. Magistrate Judge Joseph A. Dickson and was detained without bail.

Shamir Williams, 25, of Paterson, was charged by complaint on Aug. 14, 2020, along with Deaveareaux, with conspiracy to distribute 40 grams or more of fentanyl and 100 grams or more of heroin. On Aug. 20, 2020, Williams appeared by videoconference before U.S. Magistrate Judge Cathy L. Waldor and was detained without bail.

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

From May 2020 through Aug. 13, 2020, Williams negotiated sales of heroin to another individual. On June 11, 2020, pursuant to these negotiations, Deaveareaux transported approximately 250 “bricks,” or over 12,000 individual doses of heroin, from Paterson and distributed the heroin in Vermont. On Aug. 13, 2020, Abrams attempted to deliver 200 “bricks,” or over 9,000 individual doses of heroin and fentanyl, to an individual at a Passaic County Home Depot parking lot, where he was taken into custody. 

Each of the crimes charged carries a minimum penalty of five years in prison, a maximum penalty of 40 years in prison, and a fine of at least $5 million.

U.S. Attorney Carpenito credited special agents and task force officers with the DEA in New Jersey and New England, under the direction of Special Agents in Charge Susan Gibson and Brian D. Boyle, respectively, with the investigation leading to the charges.

This investigation was conducted as part of the Paterson Violent Crime Initiative (VCI). The VCI was formed in 2020 by the U.S. Attorney’s Office for the District of New Jersey and the Passaic County Prosecutor’s Office, for the sole purpose of combatting violent crime in and around Paterson. As part of this partnership, federal, state, county, and city agencies collaborate to strategize and prioritize the prosecution of violent offenders who endanger the safety of the community. The VCI is composed of the U.S. Attorney’s Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration’s (DEA) New Jersey Division, the Department of Homeland Security – Homeland Security Investigations, the Paterson Police Department, the Passaic County Prosecutor’s Office, the Passaic County Sheriff’s Office, New Jersey State Parole, and the New Jersey State Police Regional Operations and Intelligence Center/Real Time Crime Center.

The government is represented by Assistant U.S. Attorney Francesca Liquori of the Organized Crime and Gangs Unit.

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

CAMDEN, N.J. – A Camden County, New Jersey, man was charged today for detonating an explosive device at a local business and unlawfully possessing unregistered destructive devices and a short-barreled rifle, U.S. Attorney Craig Carpenito announced.

Dwayne A. Vandergrift Jr., 35, of Gloucester City, New Jersey, is charged by complaint with malicious use of explosives, unlawful possession of two destructive devices, and unlawful possession of a short-barreled rifle. Vandergrift will make his initial appearance before U.S. Magistrate Judge Karen M. Williams at a later date.

According to the complaint:

During the early morning hours of Aug. 26, 2020, Vandergrift placed an explosive device on the front door of a local gym near his home in Gloucester City. Security camera footage recorded Vandergrift fleeing the area moments before the device exploded, badly damaging the front door and shattering its glass. On Aug. 28, 2020, federal and local law enforcement officers executed a search warrant at Vandergrift’s home and found substantial quantities of bomb making materials, numerous weapons, including an unregistered short barreled rifle, several tactical vests outfitted with body armor and loaded 30-round ammunition magazines, and a marijuana grow operation containing approximately 85 marijuana plants. Upon examining Vandergrift’s personal computer devices, investigators discovered that he had recently researched how to construct and utilize various explosive devices, including pipe and pressure cooker bombs. Vandergrift was arrested by local authorities on Aug. 28, 2020, and charged by the Camden County Prosecutor’s Office. He is presently in custody on those charges. 

The malicious use of explosive charge carries a maximum prison term of 20 years and a maximum fine of $250,000. The charges for possession of the unregistered destructive devices and short-barreled rifle carry maximum prison terms of 10 years each and maximum fines of $250,000.

U.S. Attorney Carpenito credited special agents and task force officers of the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll and the FBI’s Philadelphia Joint Terrorism Task Force, with the investigation leading to today’s arrest.  He also thanked officers of the Gloucester City Police Department, under the direction of Police Chief Brian Morrell; the Camden County Prosecutor’s Office, under the direction of Acting Prosecutor Jill S. Mayer; the Camden County Sheriff’s Office, under the direction of Sheriff Gilbert L. Wilson; the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Field Division, under the direction of Special Agent in Charge Charlie J. Patterson; the New Jersey Office of Homeland Security and Preparedness, under the direction of Director Jared Maples; Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina; and the New Jersey State Police, under the direction of Col. Patrick J. Callahan.

The government is represented by Assistant U.S. Attorney Gabriel J. Vidoni of the U.S. Attorney’s Office’s Criminal Division in Camden.

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

TRENTON, N.J. – A Trenton man was sentenced today to 160 months in prison for his role in a large drug trafficking conspiracy that distributed more than one kilogram of heroin in Trenton and the surrounding area, U.S. Attorney Craig Carpenito announced. 

Omar Council, a/k/a “Stacks,” a/k/a “O,” a/k/a “Y-O,” a/k/a “Snow,” 41, previously pleaded guilty before Chief U.S. District Judge Freda L. Wolfson to an information charging him with one count of conspiracy to distribute and possess with intent to distribute 100 grams or more of heroin. Judge Wolfson imposed the sentence today.

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

In October 2018, Council and 25 other members of a drug trafficking conspiracy operating in Trenton were charged by criminal complaint with conspiracy to distribute heroin. On Aug. 8, 2019, a grand jury returned a 15-count second superseding indictment charging Council and eight other defendants, Jerome Roberts, a/k/a “Righteous,” a/k/a “Lee”; David Antonio, a/k/a “Papi,” a/k/a “Pop,” a/k/a “Victor Arias,” a/k/a “Santiago Ramirez”; Brian Phelps, a/k/a “B-Money,” a/k/a “B”; Timothy Wimbush, a/k/a “Young Money”; Taquan Williams, a/k/a “Trip”; Jubri West; Dennis Cheston, Jr., a/k/a “Beans”; and Wayne K. Bush with various crimes relating to the drug-trafficking conspiracy, including firearms charges against Phelps, Wimbush, Williams, West, and Cheston. To date, 23 defendants have pleaded guilty in connection with their participation in the conspiracy.

From as early as October 2017 to October 2018, the defendants and others engaged in a narcotics conspiracy that operated in the areas of Martin Luther King Boulevard, Sanford Street, Middle Rose Street, Southard Street, Hoffman Avenue, and Coolidge Avenue in Trenton, and which sought to profit from the distribution of heroin and numerous other controlled substances. Through the interception of telephone calls and text messages pursuant to court-authorized wiretap orders – including over a cellular telephone used by Council – controlled purchases of heroin from Council and others, the use of confidential sources of information, and other investigative techniques, law enforcement learned that Council was a significant drug distributor in and around Trenton. Council maintained close relationships with other conspirators, including Jakir Taylor, who obtained regular supplies of hundreds of “bricks” of heroin from defendant David Antonio, whom they referred to as “Papi.” Council obtained supplies of heroin directly from Taylor and others (including supplies of heroin originating from Antonio), and regularly re-distributed that heroin to others in and around Trenton.

In addition to the prison term, Judge Wolfson sentenced Council to five years of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Trenton Resident Agency, under the direction of Special Agent in Charge George M. Crouch, Jr.; special agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Newark Division, Trenton Field Office, under the direction of Special Agent in Charge Charlie J. Patterson; officers of the Trenton Police Department, under the direction of Police Director Sheilah Coley; officers of the Princeton Police Department, under the direction of Chief of Police Nicholas Sutter; officers of the Ewing Police Department, under the direction of Chief of Police John P. Stemler III; officers of the Burlington Township Police Department, under the direction of Police Director Bruce Painter; and detectives of the Burlington County Prosecutor’s Office, under the  direction of Prosecutor Scott A. Coffina, with the investigation leading to today’s conviction and sentence. He also thanked officers of the New Jersey State Police, under the direction of Superintendent Col. Patrick J. Callahan; detectives of the Mercer County Prosecutor’s Office, under the direction of Prosecutor Angelo Onofri; officers of the Mercer County Sheriff’s Office, under the direction of Sheriff John A. Kemler; and members of the New Jersey State Board of Parole for their assistance in the case.

The government is represented by J. Brendan Day, Attorney-in-Charge of the U.S. Attorney’s Office’s Trenton Branch Office, and Assistant U.S. Attorney Alexander Ramey of the U.S. Attorney’s Office’s Criminal Division in Trenton.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Greater Trenton Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies to enhance the identification, apprehension, and prosecution of individuals involved in gang-related activities, violent crime, and drug distribution in and around the greater Trenton area. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.

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

A New Jersey attorney was arrested today and charged with fraudulently obtaining approximately $9 million in Paycheck Protection Program (PPP) loans, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Craig Carpenito of the District of New Jersey.

Jae H. Choi, 48, a licensed attorney of Cliffside Park, New Jersey, was charged by criminal complaint, unsealed today upon his arrest, in the District of New Jersey with three counts of bank fraud and one count of money laundering.

The complaint alleges that Choi submitted three fraudulent PPP loan applications to three different lenders on behalf of three different businesses that purportedly provided educational services.  The complaint also alleges that Choi fabricated the existence of hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications.  

Choi allegedly falsely represented to the lenders that the companies controlled by him had hundreds of employees and paid over $3 million in monthly wages.  Based on Choi’s alleged misrepresentations, each lender funded each of the three businesses with an approximately $3 million PPP loan.  As a result, the complaint alleges that Choi received a total of nearly $9 million in federal COVID-19 emergency relief funds meant for distressed small businesses.

Choi allegedly used the fraudulently-obtained PPP loan proceeds to pay for numerous personal expenses, including to buy, among other things, a nearly one million-dollar residential home in Cresskill, New Jersey, to fund approximately $30,000 in remodeling and other improvements, and to invest millions more in the stock market through an account held in the name of his spouse.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29.  It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic.  One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent.  Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

A criminal complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

This case was investigated by IRS – Criminal Investigation, the U.S. Postal Inspection Service, the Small Business Administration Office of the Inspector General, and the Social Security Administration – Office of the Inspector General.  Trial Attorney Andrew Tyler and Assistant U.S. Attorney Andrew Macurdy of the District of New Jersey are prosecuting the case.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

NEWARK, N.J. – A Middlesex County, New Jersey, man and two Brooklyn, New York, men were charged today with bank fraud and identity theft, U.S. Attorney Craig Carpenito announced.

Benjamin Rich, 40, of Edison, New Jersey, and Frank Ambrosio, 35, and Felix Alamo, 59, both of Brooklyn, are each charged by complaint with conspiracy to commit bank fraud and aggravated identity theft. Rich and Alamo are scheduled to appear today by videoconference before U.S. Magistrate Judge James B. Clark III. Ambrosio remains at large.

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

Rich, Ambrosio, and Alamo, and others, allegedly conspired to defraud banks across New Jersey, and elsewhere, by using the personal identification information (PII) of victims to open fraudulent bank accounts in order to deposit fraudulently obtained checks. Rich would obtain checks that were either stolen or counterfeited. He would then create sham businesses with names closely resembling those of the payees appearing on the stolen or counterfeited checks. For example, if defendant Rich obtained a check made payable to “ABC Corp.,” he would create a sham business called “ABC LLC.” Rich would later provide Ambrosio, Alamo, and other conspirators, with fraudulent identification documents bearing their photographs and the victims’ PII and business opening documents in order to open the fraudulent bank accounts for the sham businesses.  The conspirators would deposit the fraudulently obtained or counterfeited checks into those fraudulent bank accounts and then withdraw the funds before anyone could detect the fraud.   

The charge of bank fraud carries a maximum of 30 years in prison and a maximum fine of $1 million, or twice the gain derived or loss caused by the offense, whichever is greater. The charge of aggravated identity theft carries a statutory minimum term of imprisonment of two years in prison, which must run consecutively to any other term of imprisonment imposed, and a fine of $250,000, or twice the gain derived or loss caused by the offense.

U.S. Attorney Carpenito credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, with the investigation leading to today’s charges.

The government is represented by Assistant U.S. Attorney Perry Farhat of the Government Frauds Unit of the U.S. Attorney’s Office’s Criminal Division in Newark.

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

TRENTON, N.J. – A Pennsylvania medical assistant today admitted participating in a conspiracy to receive bribes and kickbacks in exchange for ordering genetic tests, U.S. Attorney Craig Carpenito announced.

Amber Harris, 28, of Lake Ariel, Pennsylvania, pleaded guilty by videoconference before U.S. District Judge Anne E. Thompson to an information charging her with one count of conspiring to violate the anti-kickback statute.

Harris is the first of several defendants to plead guilty in long-running bribery and kickback schemes involving doctors and medical employees in the Scranton, Pennsylvania, area.

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

Harris worked as a medical assistant for Yitzachok “Barry” Kurtzer, a primary care physician with offices in the Scranton area. From at least 2018, Kurtzer and his wife, Robin Kurtzer, accepted monthly cash kickbacks and bribes in exchange for collecting DNA samples from Medicare patients and sending them for genetic tests to clinical laboratories in New Jersey and Pennsylvania. The cash kickbacks ranged up to $5,000, and the Kurtzers typically accepted the cash in one of Kurtzer’s offices.

Even as the ongoing COVID-19 pandemic substantially reduced in-patient visits, the Kurtzers continued with their scheme. They went from receiving hand-delivered cash kickbacks and bribes to accepting payments by wire and through a cell phone money transfer app.

Harris and another employee, Shanelyn Kennedy, also participated in the scheme. They both helped collect the DNA swabs in exchange for also receiving kickbacks and bribes, both in cash and later using the money transfer app.

As a result of the scheme, Medicare paid $755,241 for genetic tests generated from Kurtzer’s practice.

The count of conspiracy to violate the federal anti-kickback statute is punishable by a maximum of five years in prison and a fine of $250,000, or twice the gross gain or loss derived from the offense, whichever is greater. Sentencing is scheduled for Jan. 5, 2020.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and U.S. Department of Health and Human Services, Office of Inspector General, Philadelphia Regional Office, under the direction of Special Agent in Charge Maureen R. Dixon, with the investigation leading to the charges. He also thanked the FBI Scranton Field Office, FBI Philadelphia Division and the Pennsylvania Attorney General’s Office for their assistance.

The government is represented by Assistant U.S. Attorney Joshua L. Haber of the Health Care Fraud Unit in the Criminal Division, Newark.

The charges against and allegations against the remaining defendants are merely accusations, and those defendants are presumed innocent unless and until proven guilty.

NEWARK, N.J. – A California man today admitted to conspiring to offer and sell unregistered securities and to subscribing to a false tax return in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth at least $722 million, U.S. Attorney Craig Carpenito announced. 

Joseph Frank Abel, 50, of Camarillo, California, pleaded guilty by videoconference before U.S. District Judge Claire C. Cecchi to count two of the indictment, charging him with conspiracy to offer and sell unregistered securities. He also pleaded guilty to a separate information charging him with subscribing to a false tax return for the tax year 2017.

Abel and four codefendants – Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks, and Joseph Frank Abel – were charged by indictment in December 2019.

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

From April 2014 through December 2019, the BitClub Network was a fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors into the scheme. Abel operated as a large-scale promoter of the BitClub Network. He promoted and sold shares of BitClub Network despite knowing that the network and its operators did not file a registration statement to register shares with the U.S. Securities and Exchange Commission.

Abel admitted taking money from investors in exchange for shares of the BitClub Network’s purported mining pools. In order to promote shares in the BitClub Network’s mining pools, he created and posted videos to the internet and gave presentations and speeches about the BitClub Network throughout the United States and numerous other countries, including in Asia, Africa, and Europe. As part of the conspiracy, Abel instructed investors in the United States to use a virtual private network, or “VPN,” to hide their U.S.-based IP addresses and evade detection and regulation by U.S. law enforcement.

Abel admitted failing to report on a Form 1040 United States Individual Income Tax Return for the tax year 2017 approximately $1 million in cryptocurrency as income he earned from his promotion of the BitClub Network.

The conspiracy charge to which Abel pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the pecuniary gain to the defendant or loss to the victims. The tax charge to which Abel pleaded guilty carries a maximum penalty of three years in prison and a fine of $100,000. Sentencing is scheduled for Jan. 27, 2021.

U.S. Attorney Carpenito credited special agents and task force officers of the FBI Los Angeles Division’s West Covina Resident Agency, under the direction of Acting Assistant Director in Charge John F. Bennett; special agents of IRS - Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; special agents of the IRS Los Angeles Field Office, under the direction of Special Agent in Charge Ryan L. Korner; the FBI Criminal Investigative Division, under the supervision of Assistant Director Calvin A. Shivers and the Financial Crimes Section, under the leadership of Section Chief Steven Merrill, and members of the Ventura Police Department with the investigation leading to today’s guilty plea.

Anyone who believes they may be a victim can find more information about the case, including a questionnaire for victims to fill out and submit, at: www.justice.gov/usao-nj/bitclub or the Department of Justice’s large case website www.justice.gov/largecases.

The government is represented by Unit Chief David W. Feder, Assistant U.S. Attorneys Jamie L. Hoxie and Anthony P. Torntore of the Cybercrime Unit, and Unit Chief Sarah Devlin and Assistant U.S. Attorney Joseph Minish of the Asset Recovery and Money Laundering Unit, of the U.S. Attorney’s Office in Newark.

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

NEWARK, N.J. – A Bergen County, New Jersey, attorney was arrested today and charged with fraudulently obtaining approximately $9 million in Paycheck Protection Program (PPP) loans, U.S. Attorney Craig Carpenito and Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, announced.

Jae H. Choi, 48, of Cliffside Park, New Jersey, is charged by complaint with three counts of bank fraud and one count of money laundering. He is expected to make his initial appearance by videoconference today before U.S. Magistrate Judge James B. Clark III.

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

Choi allegedly submitted three fraudulent PPP loan applications to three different lenders on behalf of three different businesses that purportedly provided educational services. The complaint also alleges that Choi fabricated the existence of hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications.

Choi allegedly falsely represented to the lenders that the companies controlled by him had hundreds of employees and paid over $3 million in monthly wages. Based on Choi’s alleged misrepresentations, each lender funded each of the three businesses with an approximately $3 million PPP loan. As a result, the complaint alleges that Choi received a total of nearly $9 million in federal COVID-19 emergency relief funds meant for distressed small businesses.

Choi allegedly used the fraudulently obtained PPP loan proceeds to pay for numerous personal expenses, including to buy, among other things, a nearly $1 million home in Cresskill, New Jersey, to fund approximately $30,000 in remodeling and other improvements, and to invest millions more in the stock market through an account held in the name of his spouse.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

The charges and allegations in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty in a court of law.

This case was investigated by IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn; the Small Business Administration Office of the Inspector General; and the Social Security Administration – Office of the Inspector General.

The government is represented by Assistant U.S. Attorney Andrew Macurdy of the District of New Jersey and Trial Attorney Andrew Tyler.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

NEWARK, N.J. – A Union County, New Jersey, woman was sentenced today to 120 months in prison for possessing with intent to distribute over 900 grams of methamphetamine, U.S. Attorney Craig Carpenito announced.

Lorena Marquez, 48, of Union Township, New Jersey, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging her with one count of possession with intent to distribute over 50 grams of methamphetamine. Judge Wigenton imposed the sentence by videoconference today; she sentenced Marquez to 108 months in prison on the drug count and 12 months in prison, to be served consecutively, for violation of supervised release.

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

In 2019, during a combined federal and local investigation targeting narcotics trafficking in northern New Jersey, law enforcement learned that Marquez stored and sold crystal methamphetamine at a self-storage facility in Jersey City. Law enforcement officials ultimately executed a search of Marquez’s storage unit and recovered approximately two pounds of crystal methamphetamine from the unit. Marquez was arrested the same day.

In addition to the prison term, Marquez was sentenced five years of supervised release.

U.S. Attorney Craig Carpenito credited special agents of the U.S. Drug Enforcement Administration, under the direction of Special Agent in Charge Susan A. Gibson, with the investigation and arrest.

The government is represented by Assistant U.S. Attorney Ryan L. O’Neill of the U.S. Attorney’s Office’s Opioid Abuse Prevention and Enforcement Unit in Newark.

NEWARK, N.J. – The former chief executive officer of a New Jersey-based importer of Italian luxury cars admitted today that he failed to report to the IRS as income kickback payments he received for misallocating limited edition sports cars, Attorney for the United States Rachael Honig announced.

A luxury watch dealer also admitted failing to report to the IRS commission he received for helping facilitate the unauthorized sale of one of those limited edition sports cars.    

Maurizio Parlato, 58, of Washington, D.C., pleaded guilty by videoconference before U.S. District Judge Stanley R. Chesler to an information charging him with one count of subscribing to a false tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR). Gigi Knowle, 69, of Miami, Florida, pleaded guilty by videoconference before Judge Chesler to a separate information charging him with subscribing to a false tax return.

“This defendant admitting rigging access to purchase high-end sports cars to line his own pockets, then failed to pay taxes on the money he made on his deals,” Attorney for the United States Honig said. “He tilted the playing field to his own advantage, cheating legitimate buyers and the government in the process. Our office remains firmly committed to prosecuting those who defraud the public and the government.”

“Today, the IRS told Mr. Parlato ‘not so fast’ when he failed to report almost $2.8 million on his tax returns for the kickbacks he received to misallocate the distribution of several supercars,” Jonathan D. Larsen, Special Agent in Charge, New York Field Office, said. “Mr. Parlato tried to hide the income by moving the funds around the world. Offshore tax evasion is a top priority for IRS - Criminal Investigation and, as was shown today, we are wholeheartedly committed to bringing these offenders to justice.”

“Today's plea is another example of the great investigative work done daily by the IRS, U.S. Attorney's Office and our agents,” FBI Newark Special Agent in Charge George M. Crouch Jr. said. “It is a clear message that we will relentlessly pursue those attempting to defraud the government.”   

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

Parlato was a resident of Florida and served as the CEO of a company (Company B) based in Englewood Cliffs, New Jersey, from 2002 to 2009. Company B was responsible for distributing automobiles that were produced by a luxury automobile manufacturer (Company A) based in Maranello, Italy. Company B distributed Company A’s luxury automobiles in the Western Hemisphere through dealers based in the Americas.

Company A produced several highly desired automobile models in small quantities. Parlato had some measure of authority over the allocations of those limited edition automobiles.  In 2013, Company A announced it was creating its most exclusive model to date: a “supercar,” limited to only 500 units and carrying a manufacturer’s suggested retail price (MSRP) of approximately $1.4 million. Company A and Company B established a formula to determine which customers would be placed on the approved list to buy a supercar. 

After resigning as CEO of Company B, Parlato assisted Company B dealers and supercar purchasers in misallocating supercars in exchange for kickback payments. Between 2015 and 2017, Parlato received approximately $2.8 million from Company B dealers and supercar purchasers in exchange for, among other things, assisting them in misallocating supercars to customers who were not on the list of approved purchasers. Parlato admitted that he failed to report the $2.8 million in kickback payments he received as income on his federal individual income tax returns. Parlato also admitted that he attempted to hide some of these funds from the IRS by depositing them in a bank account in Spain and failing to disclose the existence of that bank account.  Parlato admitted that he avoided paying more than $1.1 million in taxes.

Knowle also received payments in connection with his role in misallocating a supercar.  In 2015, Knowle lived in Florida and worked as a luxury watch dealer. That year, Knowle assisted Parlato in facilitating the sale of a supercar to another individual who was not on the approved list. Knowle received approximately $560,000 as commission for his role in the sale, some of which Knowle distributed to Parlato and others who were also involved in misallocating the supercar to the unapproved purchaser. Knowle failed to disclose the commission on his personal income tax returns. Knowle admitted that he avoided paying approximately $175,000 in taxes.               

The count of subscribing to a false tax return carries a maximum potential penalty of three years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The count of failing to file a FBAR carries a maximum potential penalty of five years in prison and a $250,000 fine.   

Sentencings for Parlato and Knowle are scheduled for Jan. 12, 2021.

Attorney for the United States Honig credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in New York, and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s charges.

The government is represented by Assistant U.S. Attorney Dara Aquila Govan, Chief of the Government Fraud Unit, and Assistant U.S. Attorney Catherine R. Murphy of the Economic Crimes Unit.

NEWARK, N.J. – A Morris County, New Jersey, resident was sentenced today to 94 months in prison for perpetrating a sophisticated computer hacking scheme that targeted two companies in New Jersey, U.S. Attorney Craig Carpenito announced.

Ankur Agarwal, 45, of Montville, New Jersey, previously pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to two counts of obtaining information from computers and one count of aggravated identity theft. Judge Wigenton imposed the sentence today.

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

Beginning in February 2017, Agarwal admitted that he physically trespassed onto a company’s premises in New Jersey (Company One). Agarwal illegally installed hardware key-logger devices onto Company One’s computers. The key-logger devices covertly recorded the keystrokes of the company’s employees and gave Agarwal their usernames and passwords. Agarwal also surreptitiously installed his personal computer and a hard drive onto the company’s computer network. Using the fraudulently obtained logon credentials of company employees, Agarwal hacked into the company’s computer network and targeted various employees, including employees developing an emerging technology. Agarwal admitted that he stole, transferred, and exfiltrated Company One’s data and information, including its emerging technology. Agarwal also created a malicious computer code designed to exfiltrate data, installed it on the company’s computer systems, and executed the code to steal and transfer data to himself.

Agarwal also admitted that he hacked into, targeted, and stole data and information from a second company in New Jersey (Company Two). Using the same general scheme, Agarwal physically trespassed onto Company Two’s premises, illegally installed hardware key-logger devices onto the company’s computers, installed his personal computer and a hard drive onto the company’s computer network, and stole, transferred, and exfiltrated Company Two’s data and information, including an emerging technology that Company Two was developing.

In furtherance of his hacking scheme against Company Two, Agarwal also obtained unauthorized access into an employee’s computer system and then fraudulently created an access badge for himself. This fraudulently obtained access badge, bearing another individual’s name, allowed Agarwal to physically trespass onto Company Two’s premises.

In addition to the prison term, Judge Wigenton sentenced Agarwal to three years of supervised release and fined him $25,000.

U.S. Attorney Carpenito credited special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Matthew Feldman Nikic of the Cybercrime Unit in Newark.

NEWARK, N.J. – A Tennessee man charged with two counts of wire fraud will make his initial appearance before a New Jersey judge today, U.S. Attorney Craig Carpenito.

Ketan Ghutadaria, 50, of Johnson City, Tennessee, is charged by complaint with two counts of wire fraud and is scheduled to appear by videoconference before U.S. Magistrate Judge Edward S. Kiel. Ghutadaria was arrested in Tennessee on Aug. 13, 2020, by inspectors of the U.S. Postal Inspection Service (USPIS) and appeared before U.S. Magistrate Judge Cynthia Richardson Wyrick in Greenville, Tennessee, federal court.

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

From March 2018 through September 2018, Ghutadaria used a company’s bank account information to pay off his personal financial debts and without prior approval or authorization. Ghutadaria authorized companies to submit Automated Clearing House (ACH) debit transactions for bill payments, which were deducted from the victim company’s bank account in New York. During many of these transactions, Ghutadaria falsely represented that he was the authorized account holder for the victim company’s bank account. Ghutadaria used some of the fraudulently obtained funds to pay for a new 2017 Audi Q7 and a new 2017 Audi A6. Ghutadaria authorized 31 fraudulent ACH debit transactions utilizing the victim company’s bank account information.    

The charge of wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine, or twice the gross pecuniary gain or loss from the offense, whichever is greater.

U.S. Attorney Carpenito credited postal inspectors from the USPIS, Newark Division, under the direction of Inspector in Charge James Buthorn; postal inspectors from the USPIS – Knoxville Domicile, Atlanta Division, under the direction of Inspector in Charge Tommy Coke; the U.S. Marshals Service from the Eastern District of Tennessee, under the direction of U.S. Marshal David Jolley; and the Hudson County Prosecutor’s Office Special Investigations Unit, under the direction of Prosecutor Esther Suarez with the investigation leading to the charges.

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

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

CAMDEN, N.J. – An Iowa man today admitted to producing and possessing images of child sexual abuse, U.S. Attorney Craig Carpenito announced.

Donavon Oliphant, 38, of Independence, Iowa, pleaded guilty by videoconference before U.S. District Judge Noel L. Hillman to an information charging him with one count of sexual exploitation of a minor and one count of possession of child pornography.

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

In August 2019 Oliphant produced 11 images and four videos of child sexual abuse. The videos depicted sexual acts involving a pre-pubescent child and an adult male. Oliphant then used a peer-to-peer file-sharing program to share these images and videos with an individual located in Gloucester County, New Jersey. When law enforcement accessed Oliphant’s file-sharing account, they found more than 100 videos and 100 images of child sexual abuse.

The sexual exploitation of a minor charge carries a mandatory minimum sentence of 15 years in prison, a maximum potential penalty of 30 years in prison, and a $250,000 fine. The possession of child pornography offense carries a maximum potential penalty of 20 years in prison, and a $250,000 fine. Oliphant will be required to register as a sex offender. Sentencing is scheduled for Jan. 7, 2020.

U.S. Attorney Carpenito credited special agents of U.S. Department of Homeland Security, Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Jason Molina, with the investigation leading to today’s guilty plea.

The government is represented by Deputy U.S. Attorney Matthew J. Skahill and Assistant U.S. Attorney Daniel A. Friedman of the U.S. Attorney’s Office’s Criminal Division in Camden.

TRENTON, N.J. – A Mercer County, New Jersey, man was sentenced today to 120 months in prison for his role in a large drug trafficking conspiracy that distributed more than one kilogram of heroin in Trenton and the surrounding area, U.S. Attorney Craig Carpenito announced. 

Davias Taylor, a/k/a “Vicey,” 28, of Trenton, previously pleaded guilty before Chief U.S. District Judge Freda L. Wolfson to an information charging him with one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin. Chief Judge Wolfson imposed the sentence today in Trenton federal court.

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

In October 2018, Taylor and 25 other members of a drug trafficking conspiracy operating in Trenton were charged with conspiracy to distribute heroin. On Feb. 27, 2020, a grand jury returned a 10-count second superseding indictment charging Jerome Roberts, a/k/a “Righteous,” a/k/a “Lee”; David Antonio, a/k/a “Papi,” a/k/a “Pop,” a/k/a a/k/a “Santiago Ramirez”; Timothy Wimbush, a/k/a “Young Money”; Taquan Williams, a/k/a “Trip”; Jubri West; Dennis Cheston Jr., a/k/a “Beans”; and Wayne K. Bush with various crimes relating to the drug-trafficking conspiracy, as well as firearms offenses. To date, 23 defendants have pleaded guilty in connection with their participation in the conspiracy.

From as early as October 2017 to October 2018, the defendants and others engaged in a narcotics conspiracy that operated in the areas of Martin Luther King Boulevard, Sanford Street, Middle Rose Street, Southard Street, Hoffman Avenue, and Coolidge Avenue in Trenton, and that sought to profit from the distribution of heroin and numerous other controlled substances. Through the interception of telephone calls and text messages pursuant to court-authorized wiretap orders, controlled purchases of heroin, the use of confidential sources of information, and other investigative techniques, law enforcement learned that defendants Jakir Taylor and Jerome Roberts obtained regular supplies of hundreds of “bricks” of heroin from defendant David Antonio, to whom they referred as “Papi.” The investigation revealed that during the conspiracy, Davias Taylor met David Antonio and introduced him to his conspirators, Jakir Taylor and Jerome Roberts, so that Antonio could supply the conspiracy with significant quantities of heroin. Davias Taylor himself also obtained and redistributed significant quantities of heroin for profit.

In addition to the prison term, Davias Taylor was sentenced five years of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Trenton Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr.; special agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Newark Division, Trenton Field Office, under the direction of Special Agent in Charge Charlie J. Patterson; officers of the Trenton Police Department, under the direction of Police Director Sheilah Coley; officers of the Princeton Police Department, under the direction of Chief of Police Nicholas Sutter; officers of the Ewing Police Department, under the direction of Chief of Police John P. Stemler III; officers of the Burlington Township Police Department, under the direction of Police Director Bruce Painter; and detectives of the Burlington County Prosecutor’s Office, under the direction of Prosecutor Scott A. Coffina, with the investigation leading to today’s sentencing. He also thanked officers of the New Jersey State Police, under the direction of Superintendent Col. Patrick J. Callahan; detectives of the Mercer County Prosecutor’s Office, under the direction of Prosecutor Angelo Onofri; officers of the Mercer County Sheriff’s Office, under the direction of Sheriff John A. Kemler; and members of the New Jersey State Board of Parole for their assistance in the case.

The government is represented by J. Brendan Day, Attorney-in-Charge of the U.S. Attorney’s Office’s Trenton Office, and Assistant U.S. Attorney Alexander Ramey of the U.S. Attorney’s Office’s Criminal Division in Trenton.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Greater Trenton Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies to enhance the identification, apprehension, and prosecution of individuals involved in gang-related activities, violent crime, and drug distribution in and around the greater Trenton area. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.

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

NEWARK, N.J. – An electronic health records company based in Passaic County, New Jersey, has agreed to pay $500,000 to resolve allegations that a former subsidiary caused users to file false claims with the government, U.S. Attorney Craig Carpenito announced today. 

Konica Minolta Healthcare Americas Inc., based in Wayne, New Jersey, has agreed to pay $500,000 to resolve False Claims Act allegations that its former subsidiary, Viztek LLC, caused users to submit false claims by misrepresenting the capabilities of its electronic health records (EHR) software. 

According to documents filed in this case and the contentions of the United States contained in the settlement agreement:

The American Recovery and Reinvestment Act of 2009 established the Medicare & Medicaid EHR Incentive Program to encourage hospitals and eligible professionals – health care providers – to adopt and demonstrate their meaningful use of EHR technology. The U.S. Department of Health and Human Services (HHS) made incentive payments available to eligible professionals and hospitals that adopted certified EHR technology and met certain requirements relating to their use of the technology. To obtain certification for their product, companies that developed and marketed EHR technology were required to, among other things, demonstrate that their products satisfied certain HHS-adopted criteria.

The United States contends that Viztek fraudulently obtained certification for its product, known as “EXA EHR,” when it misrepresented to its certifying entity that the product complied with all applicable requirements for certification. Viztek knowingly caused eligible providers who used EXA EHR to falsely attest to compliance with the HHS requirements, which caused false claims for incentive payments to be submitted to the Medicare Program.

The allegations were raised in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.

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

The government is represented by Assistant U.S. Attorneys Marihug P. Cedeño, of the U.S. Attorney’s Office’s Opioid Abuse Prevention and Enforcement Unit, and Nicole F. Mastropieri, of the Health Care Fraud Unit, in Newark. 

The case is captioned United States ex rel. Leighsa Wilson v. Viztek Inc. et al. The claims settled by this settlement are allegations only, and there has been no determination of liability.

CAMDEN, N.J. – A Camden County, New Jersey, man today admitted buying and reselling high-dosage oxycodone pills in Gloucester City, New Jersey, U.S. Attorney Craig Carpenito announced.

Kenneth Rushworth, 59, of Gloucester City, pleaded guilty by videoconference before U.S. District Judge Renée Marie Bumb to an information charging him with distributing and possessing with intent to distribute a quantity of oxycodone. He is the fourth individual to plead guilty for his role in drug trafficking operations based in Gloucester City and Camden.

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

In communications that were intercepted during a wiretap investigation led by the FBI, Rushworth asked Rocco DePoder to provide Rushworth with $1,100 for high-dosage oxycodone pills on Jan. 25, 2020. Rushworth and DePoder then met in Gloucester City and, in exchange for the $1,100, Rushworth sold DePoder a quantity of 60 mg. oxycodone pills, which Rushworth had purchased from another individual for $900.  Rushworth was aware that DePoder intended to re-distribute those high-dose pills. 

On July 7, 2020, Wayne Muse pleaded guilty to his involvement in the drug trafficking operations with DePoder and Erick Bell. DePoder, Bell, and others were charged in criminal complaints in March 2020. On Aug. 11, 2020, Robert Pratt, 57, of Myrtle Beach, South Carolina, formerly of Blackwood, New Jersey, pleaded guilty before Judge Bumb to an information charging him with distributing and possessing with intent to distribute a quantity of oxycodone.  On Aug. 12, 2020, Steven Walker, 47, of Camden, pleaded guilty before Judge Bumb to an information charging him with one count of conspiracy to distribute and possess with intent to distribute a quantity of oxycodone and one count of distributing and possessing with intent to distribute a quantity of oxycodone. The individuals who have pleaded guilty await sentencing.

The count of distributing and possessing with intent to distribute a quantity of oxycodone carries a maximum penalty of 20 years in prison and a $1 million fine. Rushworth’s sentencing is scheduled for Jan. 4, 2021.

U.S. Attorney Carpenito credited special agents of the FBI, Philadelphia Division, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll; U.S. Department of Health and Human Services-Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; the Camden County Sheriff's Office, under the direction of Sheriff Gilbert L. Wilson; New Jersey Office of Homeland Security and Preparedness, under the direction of Director Jared M. Maples; the Camden County Police Department, under the direction of Chief Joseph Wysocki; and the U.S. Department of Agriculture-Office of Inspector General, under the direction of Special Agent in Charge Bethanne M. Dinkins, with the investigation leading to today’s guilty plea. He also thanked the FBI Newark Division, New Jersey State Police, Camden County Prosecutor’s Office, and U.S. Drug Enforcement Administration (DEA) for their assistance.

The government is represented by Assistant U.S. Attorneys Gabriel J. Vidoni of the Office’s Camden branch and Sara F. Merin of the Newark Office.

The charges against DePoder and Bell remain pending, and they are presumed innocent unless and until proven guilty.

CAMDEN, N.J. – A Camden, New Jersey, man today admitted his role in a scheme that netted tens of thousands of dollars in government funds using fraudulently procured electronic benefits transfer (EBT) cards, U.S. Attorney Craig Carpenito announced.

Jose Garcia, 53, pleaded guilty by videoconference before U.S. District Court Judge Renée Marie Bumb to an information charging him with one count of conspiracy to defraud the United States and one count of defrauding the U.S. Department of Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP).

Garcia and his co-defendants, Luciano Estevez, 51, also of Camden; Octavio Rodriguez, 51, of Pennsauken, New Jersey; and Juan Melo, 57, of Woodlynne, New Jersey, were previously charged by separate complaints in August 2019 with participating in the conspiracy and defrauding SNAP. Estevez, Rodriguez, and Melo all previously pleaded guilty to participating in the conspiracy and defrauding SNAP. 

SNAP, formerly known as the food stamp program, is administered by the USDA to assist low-income individuals and families with the purchase of groceries and food items. SNAP recipients receive EBT cards, similar to commercial debit cards, to make food purchases. Retailers authorized to accept SNAP benefits have EBT terminals to process the food purchases. Food purchases are made by swiping the EBT card at the terminal, and having customers enter a Personal Identification Number (PIN). The EBT terminal verifies the PIN, determines whether the customer’s account balance is sufficient to cover the proposed transaction, and informs the retailer whether the transaction should be authorized or denied. The amount of the purchase is deducted electronically from the SNAP benefits reserved for the customer and the purchase amount is credited to the retailer’s designated bank account.

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

Garcia, Estevez, Rodriguez, Melo, and others allegedly targeted low-income individuals who possessed or had access to EBT cards, and unlawfully purchased the cards from these individuals in exchange for cash and controlled substances. Two confidential sources working with law enforcement engaged in 43 controlled transactions involving EBT cards totaling more than $40,500, which they exchanged for cash and controlled substances, including prescription opioids.

The defendants used the unlawfully procured EBT cards to purchase bulk goods and food items from large national superstores. These goods and food items were often then resold in small convenience and grocery stores owned or affiliated with the defendants or their associates, resulting in a profit for the defendants. Hundreds of EBT cards fraudulently procured by the defendants were used at these superstores, resulting in the misappropriation of tens of thousands of dollars in government funds.

Estevez also unlawfully procured an EBT terminal registered to a superstore in Philadelphia, Pennsylvania. to use at his small grocery store in Camden, which was not registered as a lawful SNAP merchant in the USDA program. Through this terminal, the scheme netted an additional approximately $110,000 in SNAP funds. 

The conspiracy count to which Garcia pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. The SNAP fraud offense to which Garcia pleaded guilty carries a maximum penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense.  Garcia’s sentencing is scheduled for Jan. 4, 2020. 

U.S. Attorney Carpenito credited special agents of the U.S. Department of Agriculture-Office of Inspector General, Northeast Region, under the direction of Special Agent in Charge Bethanne M. Dinkins; the U.S. Department of Health and Human Services-Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; the FBI Philadelphia Field Office, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll in Philadelphia; and the Camden County Police Department, under the direction of Chief of Police Joseph D. Wysocki, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Christina O. Hud of the U.S. Attorney’s Office’s Criminal Division in Camden.

NEWARK, N.J. – A Union County, New Jersey, man has been indicted on charges of making corrupt payments to a public official, wire fraud, and using a facility in interstate commerce to facilitate bribery, U.S. Attorney Craig Carpenito announced today.

Jeanmarie Zahore, 56, of Rahway, New Jersey, is charged in an indictment unsealed today with one count of making corrupt payments to an agent of a local government receiving federal funds, two counts of wire fraud, and one count of violating the Travel Act to carry on bribery. Zahore made his initial appearance before U.S. Magistrate Judge Cathy L. Waldor and was released on $100,000 unsecured bond. No date has been scheduled for Zahore’s arraignment.

According to the indictment:

Zahore was the sole owner of JZ Nettech, a computer consulting business that he operated out of his residence. On Sept.15, 2015, the City Council of Orange Township, New Jersey, passed a resolution awarding JZ Nettech, without competitive bidding, a $350,000 emergency contract to install a computer networking system at a municipal complex that housed the Orange Municipal Court and the Orange Police Department (the “Municipal Complex Project”).

From August 2015 through at least Nov. 23, 2015, Zahore engaged in a scheme to offer and give corrupt cash payments to an unnamed Orange public official (“Individual 1”) to influence and reward Individual 1 for using Individual 1’s influence to arrange for Orange to award JZ Nettech the emergency contract and to facilitate payments from Orange to JZ Nettech.

After communications between Zahore and Individual 1, at a meeting at the Municipal Complex on Sept. 14, 2015, Individual 1 advised a senior official of the Orange Municipal Court (the “Court Official”) and a senior official of the Orange Police Department (the “Police Department Official”) that: (a) there was an urgent need to address a potential security vulnerability in the Municipal Complex’s computer network, and (b) JZ Nettech had been selected as the vendor to fix the problem. Individual 1 caused Orange to issue a Certification of Funds, certifying that $350,000 was available for the Municipal Complex Project and identifying the vendor as JZ Nettech.

On Sept. 15, 2015, Individual 1 spoke before the Orange City Council in support of allocating emergency funds for the Municipal Complex Project and awarding the Municipal Complex Project to JZ Nettech. At the meeting, during which Orange City Council members raised questions about the selection of JZ Nettech as the vendor for the Municipal Complex Project, Individual 1 did not disclose that Individual 1 had engaged in communications with Zahore since at least Aug. 31, 2015.

On Sept. 16, 2015, the day after the Orange City Council approved the $350,000 contract, Individual 1 approved the issuance of a blanket purchase order authorizing Orange to pay JZ Nettech $350,000 in connection with the Municipal Complex Project.

On Sept. 17, 2015, after Zahore and Individual 1 text-messaged about Zahore’s invoice to Orange and meeting with each other, Zahore sent an email to Orange Employee 1, attached to which was a JZ Nettech “invoice related to the 1st stage of the project” seeking a payment of $115,000.  On the same date, Zahore sent a text message to Individual 1, stating, “I sent [the JZ Nettech invoice for $115,000] to [Orange Employee 1]. Do you want a copy sent to u?”

On Sept. 18, 2015, Zahore sent an email to Orange Employee 1, attached to which was a revised JZ Nettech invoice, still seeking a payment of $115,000, but now indicating that $34,460 of the $115,000 was for the “Purchase of wiring for buildings.” On the same date, at Individual 1’s direction, the Police Department Official signed and approved a purchase order for the payment of $115,000 to JZ Nettech for the “PURCH[ASE] OF WIRING/CABLE/SUPPLIES” for the Municipal Complex Project. Typically, vendors are not pre-paid by Orange to purchase supplies for a project.

From Sept. 18, 2015, to Nov. 10, 2015, Zahore received and deposited three Orange checks totaling $350,000 in connection with the Municipal Complex Project into a bank account for him and JZ Nettech.

On Nov. 20, 2015, and Nov. 23, 2015, Zahore withdrew a total of approximately $50,000 in cash from this bank account, which was obtained, in substantial part, from the funds paid by Orange. On each of those same dates, Zahore gave, and Individual 1 accepted, approximately $10,000 in cash, which was intended to influence and reward Individual 1 for Individual 1’s assistance in connection with the Municipal Complex Project. Zahore characterized those two cash payments to Individual 1 totaling approximately $20,000 in a spreadsheet that Zahore maintained of expenses related to the Municipal Complex Project as follows:

11/20/2015

Gift: [Initials of Individual 1]

$10,000.00

11/23/2015

Gift: [Initials of Individual 1]

$10,000.00

Each of the following charges carries the following maximum potential penalties:

The count of making corrupt payments to an agent of a local government receiving federal funds is punishable by a maximum of 10 years in prison; the count of wire fraud is punishable by a maximum of 20 years in prison; and the count of use of an interstate facility to facilitate bribery is punishable by a maximum of five years in prison. Each count also carries a potential fine of $250,000.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to today’s charges.

The government is represented by Assistant U.S. Attorneys Cari Fais and J Fortier Imbert of the U.S. Attorney’s Office’s Special Prosecutions Division.

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

NEWARK, N.J. – The Bank of Nova Scotia (Scotiabank), a Toronto, Canada-based global banking and financial services firm, has entered into a resolution with the Department of Justice to resolve criminal charges related to a price manipulation scheme involving thousands of episodes of unlawful trading activity by four traders in the precious metals futures contracts markets. 

Scotiabank entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today in the District of New Jersey charging the company with one count of wire fraud and one count of attempted price manipulation.  Under the terms of the DPA, Scotiabank has agreed to the imposition of an independent compliance monitor, and will pay over $60.4 million in a criminal monetary penalty, criminal disgorgement, and victim compensation, with part of the criminal monetary penalty credited against payments made to the Commodity Futures Trading Commission (CFTC) under a separate agreement with the CFTC being announced today.

“For over eight years, Scotiabank traders placed thousands of orders for precious metals futures contracts in an attempt to manipulate prices for their own and the bank’s benefit and to deceive other market participants,” said Chief Robert A. Zink of the Justice Department’s Criminal Division, Fraud Section.  “This deferred prosecution agreement—which includes a criminal monetary penalty at the top of the United States Sentencing Guidelines range, money to compensate victims, and an independent compliance monitor—reflects the seriousness of the offense and the state of Scotiabank’s compliance program, and further helps to promote the integrity of our public markets.”

“For the markets to work fairly, everyone needs to be able to make trading decisions with consistent, accurate information,” said U.S. Attorney Craig Carpenito for the District of New Jersey.  “In the conduct described here, four Scotiabank traders attempted to rig precious metals futures prices in their favor by placing thousands of orders they knew they would cancel before the trades were executed. In this way, they sought to illegally manipulate the market to their own advantage, and to the disadvantage of other traders. The resolution announced requires Scotiabank to pay a substantial penalty and places them under watch by an independent compliance monitor.”

“Today, Scotiabank has admitted to their role in a massive price manipulation scheme aimed at falsely manufacturing the prices of precious metals futures contracts to serve the bank’s best interests,” said Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.  “The bank’s actions were designed to lead others to trade in ways they never would have without what was believed to be legitimate market activity.  Scotiabank’s agreement to surrender more than $60 million in criminal fines, disgorgement and victim compensation underscores the severe penalties that can be levied against those who wish to engage in similar, illegal business tactics.”

“The consequences of the actions of these traders are far reaching, affecting not only the economy of the United States, but also the world’s financial markets,” said Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service’s Criminal Investigations Group. “Anyone who thinks that manipulating trading markets to benefit their own bank accounts should see today’s announcement as a significant warning. The U.S. Postal Inspection Service has an extensive history of investigating complex financial fraud schemes in order to protect investors as well as the integrity of the financial marketplace.” 

According to admissions and court documents,  between approximately January 2008 and July 2016, four precious metals traders located in New York, London and Hong Kong engaged in fraudulent and manipulative trading practices in the markets for gold, silver, platinum, and palladium futures contracts (collectively, precious metals futures contracts) that traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by the CME Group, Inc.  One of the traders, Corey Flaum, 42, of Delray Beach, Florida, pleaded guilty on July 25, 2019, to one count of attempted price manipulation in connection with his precious metals futures contracts trading at Scotiabank and another financial services firm, and his sentencing is scheduled for Jan. 27, 2021, before U.S. District Judge Brian M. Cogan of the Eastern District of New York.

As part of the DPA, Scotiabank has agreed to, among other things, continue to cooperate with the department in any ongoing investigations and prosecutions relating to the underlying misconduct, to modify its compliance program where necessary and appropriate, and to retain an independent compliance monitor for a period of three years.

A number of relevant considerations contributed to the department’s criminal resolution with Scotiabank, including the nature and seriousness of the offense, the state of Scotiabank’s compliance program, and Scotiabank’s failure to fully and voluntarily self-disclose the offense conduct to the department.

As Scotiabank admitted in the DPA, Flaum and the three other traders, collectively, placed thousands of orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution.  By placing these orders, the traders intended to artificially move the prices of precious metals futures contracts in a direction that was favorable to them, and to inject false and misleading information into the precious metals futures markets in order to deceive other market participants into believing something untrue, namely that the market reflected legitimate supply and demand.  This false and misleading information was intended to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling futures contracts at quantities, prices, and times that they otherwise likely would not have traded.

As set forth in the DPA, Scotiabank’s compliance function failed to detect or prevent the four traders’ unlawful trading practices.  Moreover, between August 2013 and February 2016, three Scotiabank compliance officers possessed information regarding unlawful trading by one of the traders other than Flaum but failed to prevent further unlawful conduct by this same trader. These facts were significant considerations that counseled for the imposition of a criminal monetary penalty at the high end of the applicable United States Sentencing Guidelines range under the DPA.

Since the time of the underlying offense conduct, Scotiabank has made significant investments to improve its compliance technology and trade surveillance tools, has nearly doubled its annual compliance operating budget, has added more than 200 full-time equivalent compliance positions, and is in the process of winding down its precious metals business.  The department ultimately determined, however, that an independent compliance monitor was necessary because Scotiabank’s remedial improvements to its compliance and ethics program have yet not been fully implemented and tested to demonstrate that they would be effective in detecting and preventing similar misconduct in the future.

Scotiabank did not receive voluntary disclosure credit because it did not voluntarily and timely disclose the offense conduct to the department.  In 2016, after one of its futures commission merchants flagged trading by Flaum for possible spoofing, Scotiabank made a voluntary disclosure regarding Flaum to the CFTC.  As a result of recordkeeping failures, however, Scotiabank’s disclosure to the CFTC was materially incomplete.  As a result, the CFTC was impaired in its ability to fully investigate Flaum’s unlawful trading and discover the true extent of the misconduct. The CFTC, relying on Scotiabank’s incomplete and, ultimately, inaccurate disclosure, entered into a resolution with Scotiabank in 2018 that did not reflect the full extent of Flaum’s conduct (2018 CFTC Resolution).  In the 2018 CFTC resolution, Scotiabank received a substantially reduced penalty in recognition of, among other things, its purported self-reporting.

Today, the CFTC announced two separate settlements with Scotiabank in connection with related, parallel proceedings.  One of Scotiabank’s resolutions with the CFTC relates to unlawful trading by Flaum and the three other traders that Scotiabank did not fully disclose to the CFTC in connection with the CFTC’s prior investigation that resulted in the 2018 CFTC Resolution, discussed above.  Under the terms of the new agreement between Scotiabank and the CFTC, Scotiabank agreed to pay approximately $60.4 million, which includes a civil monetary penalty of $42 million, as well as restitution and disgorgement that will be credited to any such payments made to the department.  The second resolution between Scotiabank and the CFTC relates to certain false statements that Scotiabank made to the CFTC (including in connection with the investigation that resulted in the 2018 CFTC Resolution), the COMEX, and the National Futures Association.  Under the terms of this agreement, Scotiabank has agreed to pay a civil monetary penalty of approximately $17 million.

The FBI’s New York Field Office and the USPIS investigated this case.  Assistant Chief Avi Perry and Trial Attorneys Matthew F. Sullivan and Alexander Kramer of the Fraud Section and Assistant U.S. Attorney Catherine R. Murphy of the District of New Jersey prosecuted the case.  The CFTC’s Division of Enforcement provided assistance in this matter.

Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website at https://www.justice.gov/criminal-vns/case/the-bank-of-nova-scotia-dpa or call (888) 549-3945.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

The Bank of Nova Scotia (Scotiabank), a Toronto, Canada-based global banking and financial services firm, has entered into a resolution with the Department of Justice to resolve criminal charges related to a price manipulation scheme involving thousands of episodes of unlawful trading activity by four traders in the precious metals futures contracts markets. 

Scotiabank entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today in the District of New Jersey charging the company with one count of wire fraud and one count of attempted price manipulation.  Under the terms of the DPA, Scotiabank has agreed to the imposition of an independent compliance monitor, and will pay over $60.4 million in a criminal monetary penalty, criminal disgorgement, and victim compensation, with part of the criminal monetary penalty credited against payments made to the Commodity Futures Trading Commission (CFTC) under a separate agreement with the CFTC being announced today.

“For over eight years, Scotiabank traders placed thousands of orders for precious metals futures contracts in an attempt to manipulate prices for their own and the bank’s benefit and to deceive other market participants,” said Chief Robert A. Zink of the Justice Department’s Criminal Division, Fraud Section.  “This deferred prosecution agreement—which includes a criminal monetary penalty at the top of the United States Sentencing Guidelines range, money to compensate victims, and an independent compliance monitor—reflects the seriousness of the offense and the state of Scotiabank’s compliance program, and further helps to promote the integrity of our public markets.”

“For the markets to work fairly, everyone needs to be able to make trading decisions with consistent, accurate information,” said U.S. Attorney Craig Carpenito for the District of New Jersey.  “In the conduct described here, four Scotiabank traders attempted to rig precious metals futures prices in their favor by placing thousands of orders they knew they would cancel before the trades were executed. In this way, they sought to illegally manipulate the market to their own advantage, and to the disadvantage of other traders. The resolution announced requires Scotiabank to pay a substantial penalty and places them under watch by an independent compliance monitor.”

“Today, Scotiabank has admitted to their role in a massive price manipulation scheme aimed at falsely manufacturing the prices of precious metals futures contracts to serve the bank’s best interests,” said Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.  “The bank’s actions were designed to lead others to trade in ways they never would have without what was believed to be legitimate market activity.  Scotiabank’s agreement to surrender more than $60 million in criminal fines, disgorgement and victim compensation underscores the severe penalties that can be levied against those who wish to engage in similar, illegal business tactics.”

“The consequences of the actions of these traders are far reaching, affecting not only the economy of the United States, but also the world’s financial markets,” said Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group.  “Anyone who thinks that manipulating trading markets to benefit their own bank accounts should see today’s announcement as a significant warning. The U.S. Postal Inspection Service has an extensive history of investigating complex financial fraud schemes in order to protect investors as well as the integrity of the financial marketplace.”  

According to admissions and court documents,  between approximately January 2008 and July 2016, four precious metals traders located in New York, London and Hong Kong engaged in fraudulent and manipulative trading practices in the markets for gold, silver, platinum, and palladium futures contracts (collectively, precious metals futures contracts) that traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by the CME Group, Inc.  One of the traders, Corey Flaum, 42, of Delray Beach, Florida, pleaded guilty on July 25, 2019, to one count of attempted price manipulation in connection with his precious metals futures contracts trading at Scotiabank and another financial services firm, and his sentencing is scheduled for Jan. 27, 2021, before U.S. District Judge Brian M. Cogan of the Eastern District of New York.

As part of the DPA, Scotiabank has agreed to, among other things, continue to cooperate with the department in any ongoing investigations and prosecutions relating to the underlying misconduct, to modify its compliance program where necessary and appropriate, and to retain an independent compliance monitor for a period of three years.

A number of relevant considerations contributed to the department’s criminal resolution with Scotiabank, including the nature and seriousness of the offense, the state of Scotiabank’s compliance program, and Scotiabank’s failure to fully and voluntarily self-disclose the offense conduct to the department.

As Scotiabank admitted in the DPA, Flaum and the three other traders, collectively, placed thousands of orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution.  By placing these orders, the traders intended to artificially move the prices of precious metals futures contracts in a direction that was favorable to them, and to inject false and misleading information into the precious metals futures markets in order to deceive other market participants into believing something untrue, namely that the market reflected legitimate supply and demand.  This false and misleading information was intended to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling futures contracts at quantities, prices, and times that they otherwise likely would not have traded.

As set forth in the DPA, Scotiabank’s compliance function failed to detect or prevent the four traders’ unlawful trading practices.  Moreover, between August 2013 and February 2016, three Scotiabank compliance officers possessed information regarding unlawful trading by one of the traders other than Flaum but failed to prevent further unlawful conduct by this same trader. These facts were significant considerations that counseled for the imposition of a criminal monetary penalty at the high end of the applicable United States Sentencing Guidelines range under the DPA.

Since the time of the underlying offense conduct, Scotiabank has made significant investments to improve its compliance technology and trade surveillance tools, has nearly doubled its annual compliance operating budget, has added more than 200 full-time equivalent compliance positions, and is in the process of winding down its precious metals business.  The department ultimately determined, however, that an independent compliance monitor was necessary because Scotiabank’s remedial improvements to its compliance and ethics program have yet not been fully implemented and tested to demonstrate that they would be effective in detecting and preventing similar misconduct in the future.

Scotiabank did not receive voluntary disclosure credit because it did not voluntarily and timely disclose the offense conduct to the department.  In 2016, after one of its futures commission merchants flagged trading by Flaum for possible spoofing, Scotiabank made a voluntary disclosure regarding Flaum to the CFTC.  As a result of recordkeeping failures, however, Scotiabank’s disclosure to the CFTC was materially incomplete.  As a result, the CFTC was impaired in its ability to fully investigate Flaum’s unlawful trading and discover the true extent of the misconduct. The CFTC, relying on Scotiabank’s incomplete and, ultimately, inaccurate disclosure, entered into a resolution with Scotiabank in 2018 that did not reflect the full extent of Flaum’s conduct (2018 CFTC Resolution).  In the 2018 CFTC resolution, Scotiabank received a substantially reduced penalty in recognition of, among other things, its purported self-reporting.

Today, the CFTC announced two separate settlements with Scotiabank in connection with related, parallel proceedings.  One of Scotiabank’s resolutions with the CFTC relates to unlawful trading by Flaum and the three other traders that Scotiabank did not fully disclose to the CFTC in connection with the CFTC’s prior investigation that resulted in the 2018 CFTC Resolution, discussed above.  Under the terms of the new agreement between Scotiabank and the CFTC, Scotiabank agreed to pay approximately $60.4 million, which includes a civil monetary penalty of $42 million, as well as restitution and disgorgement that will be credited to any such payments made to the department.  The second resolution between Scotiabank and the CFTC relates to certain false statements that Scotiabank made to the CFTC (including in connection with the investigation that resulted in the 2018 CFTC Resolution), the COMEX, and the National Futures Association.  Under the terms of this agreement, Scotiabank has agreed to pay a civil monetary penalty of approximately $17 million.

The FBI’s New York Field Office and the USPIS investigated this case.  Assistant Chief Avi Perry and Trial Attorneys Matthew F. Sullivan and Alexander Kramer of the Fraud Section and Assistant U.S. Attorney Catherine R. Murphy of the District of New Jersey prosecuted the case.  The CFTC’s Division of Enforcement provided assistance in this matter.

Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website at https://www.justice.gov/criminal-vns/case/the-bank-of-nova-scotia-dpa or call (888) 549-3945.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

NEWARK, N.J. – A Passaic County, New Jersey, man today admitted conspiring to distribute heroin and to distributing a quantity of heroin, U.S. Attorney Craig Carpenito announced.

Dwayne Northern, a/k/a “Black,” a/k/a “D Black,” 35, of Paterson, New Jersey, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to an information charging him with conspiracy to distribute and possess with the intent to distribute heroin and knowingly and intentionally distributing heroin.

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

The defendant and his conspirators are members and associates of the 230 Boys street gang, which operates primarily around Rosa Parks Boulevard and Godwin Avenue in Paterson. Through investigative techniques, including numerous controlled purchases of narcotics, consensually recorded telephone calls and text messages, physical surveillance, and the analysis of telephone call detail records, law enforcement determined that from at least September 2018 through Oct. 1, 2019, the defendant and his conspirators conspired to distribute narcotics, including heroin and fentanyl.

Each count to which Northern pleaded guilty carries a maximum penalty of 20 years in prison and a fine of at least $1 million. Sentencing is scheduled for Dec. 21, 2020.

This case is being conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.

U.S. Attorney Carpenito credited special agents and task force officers with the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Division, under the direction of Special Agent in Charge Charlie J. Patterson; special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Susan A. Gibson in Newark; officers of the N.J. State Police, under the direction of Col. Patrick J. Callahan; officers of the Paterson Police Department, under the direction of Director Jerry Speziale and Police Chief Ibrahim Baycora; detectives of the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia Valdes; and the Passaic County Sheriff’s Office, under the direction of Sheriff Richard H. Berdnik, with the investigation leading to the charges. He also thanked the U.S. Marshals Service, the Bergen County Sheriff's Office and the Belleville and Livingston police departments for their assistance with the case.

The government is represented by Assistant U.S. Attorney Francesca Liquori, of the Organized Crime and Gangs Unit.

NEWARK, N.J. – An Atlantic County, New Jersey, man today admitted his role in engaging in a pattern of fraudulent activity through his auto dealership, U.S. Attorney Craig Carpenito announced.

Afzal Khan, a/k/a “Bobby Khan,” 38, of Egg Harbor Township, New Jersey, pleaded guilty by videoconference before U.S. District Judge William J. Martini to Count One of an indictment charging him with wire fraud.

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

From at least December 2013 through September 2014, Khan, through his car dealership, Emporio Motor Group (Emporio) of Ramsey, New Jersey, engaged in acts to defraud lenders and customers. Khan obtained loans from the auto finance division of a large bank for cars that he never delivered, but for which the purchaser was still responsible. Khan also obtained loans from the victim bank for cars that were delivered, but for which neither he nor Emporio had title. As a result, the purchasers of these cars were liable for the loans, but could not register the cars. In addition, Khan offered to sell cars for individuals on consignment, but did not return the cars or provide any money to the individuals from the sale of the cars. Khan admitted that as a result of his actions, he exposed the victim bank to a potential loss of at least $550,000.

Khan faces a maximum penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing is scheduled for Dec. 17, 2020.

U.S. Attorney Carpenito credited special agents of the FBI’s Newark Division, under the direction of Acting Special Agent in Charge Joe Denahan, with the investigation leading to today’s guilty plea. He also thanked the Bergen County Prosecutor’s Office and the Ramsey Police Department for their assistance.

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