District of New Jersey

WASHINGTON –The Justice Department today announced that PHH Mortgage Corporation (PHH) has agreed to pay $750,000 to six servicemembers to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by unlawfully foreclosing on their homes without obtaining the required court orders.

“The brave men and women who serve in our nation’s armed forces frequently are required to deploy and serve overseas with little notice,” said U.S. Attorney Craig Carpenito. “This Office remains resolute in its commitment to honor their personal sacrifices when they do so by ensuring that servicemembers’ rights will be protected, as the law requires, whenever duty calls. This agreement ensures that servicemembers will be compensated for the damages they suffered when their homes were improperly foreclosed upon while they were serving our country.”

“Our men and women in uniform deserve to be able to focus on their job of keeping our country safe without worrying about losing their home to an unlawful foreclosure,” said Assistant Attorney General Eric Dreiband. “The Civil Rights Division is committed to protecting the rights of our servicemembers from unlawful conduct.”

The SCRA prohibits foreclosing on the home of a servicemember during active military service and one year thereafter without a court order if the mortgage originated prior to the servicemember’s period of military service.

PHH is one of the United States’ largest mortgage loan servicers, operating nationwide. The New Jersey-based company also originates, sells and subservices residential mortgage loans.
The Department launched an investigation, which was handled jointly by the U.S. Attorney’s Office for the District of New Jersey and the Department’s Civil Rights Division, after it received a complaint in May 2016 through the Department’s Servicemembers and Veterans Initiative. The Department’s investigation revealed that PHH foreclosed on six homes of SCRA-protected servicemembers in violation of the SCRA between 2010 and 2012.

The agreement resolves a suit filed today by the United States in the U.S. District Court for the District of New Jersey.

The agreement requires PHH to pay $125,000 to each servicemember whose home was unlawfully foreclosed upon. The agreement also requires PHH to provide training to its staff to ensure that servicemembers do not face unlawful foreclosures in the future, and to notify the Department of future complaints regarding servicemembers’ rights.

The Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorney’s Offices throughout the country. The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, pre-paid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. Since 2011, the Department has obtained over $468 million in monetary relief for servicemembers through its enforcement of the SCRA. For more information about the Department’s SCRA enforcement, please visit www.servicemembers.gov.

Servicemembers and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at http://legalassistance.law.af.mil/content/locator.php.

Individuals who believe their civil rights have been violated in the District of New Jersey may also file a complaint with the U.S. Attorney’s Office for the District of New Jersey at: http://www.justice.gov/usao-nj/civil-rights-enforcement/complaint or may call the U.S. Attorney’s Office’s Civil Rights Complaint Hotline at (855) 281-3339.

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; Assistant U.S. Attorney Christopher Amore, Criminal Division; and Trial Attorney Alan Martinson, U.S. Department of Justice, Civil Rights Division, Housing and Civil Enforcement Section.

NEWARK, N.J. – A New Jersey man appeared in federal court today on charges that he promised to pay a purported hitman to kill his estranged wife, U.S. Attorney Craig Carpenito announced. The defendant’s ex-girlfriend, who appeared in federal court Feb. 5, 2019, is also charged with participating in the plot.

Narsan Lingala, 55, of Middlesex County, New Jersey, is charged by criminal complaint with one count of murder-for-hire. He appeared today before U.S. Magistrate Judge Michael A. Hammer in Newark federal court and was held without bail. Lingala’s ex-girlfriend, Sandya Reddy, 52, appeared before Judge Hammer on the same charge and was also detained.

According to the complaint:

In May 2018, Lingala was in a holding cell at the Middlesex County Superior Courthouse as he awaited a court hearing. While there, he asked another inmate if he knew anyone who could kill his estranged wife. The inmate responded that he knew such a person. In June 2018, at the direction of law enforcement, the inmate introduced Lingala to an undercover agent posing as a hitman. Over subsequent weeks, Lingala and the undercover hitman spoke by phone and planned to meet in person the next time that Lingala traveled from Indiana to New Jersey.

On Aug. 18, 2018, Lingala and the undercover hitman agreed to meet in person outside a New Jersey shopping mall. Later that day, Lingala and his then-girlfriend, Reddy, arrived outside the mall and approached the undercover hitman. Lingala introduced Reddy and stated that she understood what was going on. Lingala, Reddy, and the undercover hitman entered the undercover hitman’s car. They proceeded to have a conversation that was video recorded.

The undercover hitman asked Lingala to confirm what he wanted the undercover hitman to do. Lingala said, “I want that woman to be out of my life . . . totally. Never again. She never comes back.” During the conversation, the undercover hitman asked, “You want me to take care of her?” Lingala responded, “Yeah.” The undercover hitman stated, “She’s done, I’m going to kill her. End of story.” Lingala responded, “Yeah. End of story.”

During the conversation, Lingala gave the undercover hitman information about the intended victim. Lingala provided his ex-wife’s full name, home address, age, and home phone number. He also described the entrances to and layout of her home; the name of the company where she worked; and the timing and details of her work commute. Lingala showed the undercover hitman photos of the exterior and interior of his ex-wife’s home. Reddy also provided the undercover hitman information about the intended victim.

The undercover hitman, Lingala, and Reddy also discussed the price that the undercover hitman would be paid. The undercover hitman said the job would cost between $5,000 and $10,000, depending on the job’s complexity. Lingala agreed and asked if he could pay after the job was done. The undercover hitman said he would need a down payment. Lingala and Reddy discussed the issue, and then Lingala asked the undercover hitman, “Can I give you a thousand down payment?” The undercover hitman agreed. Lingala later stated, “I want that money to go into your pocket.” Lingala informed the undercover hitman that making the down payment would take about two weeks. After the meeting, authorities arrested Lingala and Reddy

The murder-for-hire charge is punishable by a maximum of 10 years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, as well as the Middlesex County Prosecutor’s Office and detectives, under the direction of Prosecutor Andrew Carey, with the investigation leading to the charges.

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

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

Defense counsel: Lingala: Candace Hom Esq., Assistant Federal Public Defender, Newark
Reddy: Patrick McMahon Esq., Assistant Federal Public Defender, Newark

WASHINGTON –The Justice Department today announced that PHH Mortgage Corporation (PHH) has agreed to pay $750,000 to six servicemembers to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by unlawfully foreclosing on their homes without obtaining the required court orders.

“Our men and women in uniform deserve to be able to focus on their job of keeping our country safe without worrying about losing their homes to an unlawful foreclosure,” said Assistant Attorney General Eric Dreiband. “The Civil Rights Division is committed to protecting the rights of our servicemembers from unlawful conduct.”

“The brave men and women who serve in our nation’s armed forces frequently are required to deploy and serve overseas with little notice,” U.S. Attorney Craig Carpenito said. “This Office remains resolute in its commitment to honor their personal sacrifices when they do so by ensuring that servicemembers’ rights will be protected, as the law requires, whenever duty calls. This agreement ensures that servicemembers will be compensated for the damages they suffered when their homes were improperly foreclosed upon while they were serving our country.”

The SCRA prohibits foreclosing on the home of a servicemember during active military service and one year thereafter without a court order if the mortgage originated prior to the servicemember’s period of military service.

PHH is one of the United States’ largest mortgage loan servicers, operating nationwide. The New Jersey-based company also originates, sells and subservices residential mortgage loans.      

The Department launched an investigation, which was handled jointly by the Department’s Civil Rights Division and the U.S. Attorney’s Office for the District of New Jersey, after it received a complaint in May 2016 through the Department’s Servicemembers and Veterans Initiative. The Department’s investigation revealed that PHH foreclosed on six homes of SCRA-protected servicemembers in violation of the SCRA between 2010 and 2012.

The agreement resolves a suit filed today by the United States in the United States District Court for the District of New Jersey.

The agreement requires PHH to pay $125,000 to each servicemember whose home was unlawfully foreclosed upon. The agreement also requires PHH to provide training to its staff to ensure that servicemembers do not face unlawful foreclosures in the future, and to notify the Department of future complaints regarding servicemembers’ rights.

The Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorney’s Offices throughout the country. The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, pre-paid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. Since 2011, the Department has obtained over $468 million in monetary relief for servicemembers through its enforcement of the SCRA. For more information about the Department’s SCRA enforcement, please visit www.servicemembers.gov. 

Servicemembers and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at http://legalassistance.law.af.mil/content/locator.php.

Individuals who believe their civil rights have been violated in the District of New Jersey may also file a complaint with the U.S. Attorney’s Office for the District of New Jersey at: http://www.justice.gov/usao-nj/civil-rights-enforcement/complaint or may call the U.S. Attorney’s Office’s Civil Rights Complaint Hotline at (855) 281-3339.

NEWARK, N.J. – A Middlesex County, New Jersey, man was arrested this morning for allegedly submitting 11 fraudulent H-1B visa applications as well as fraudulently procuring his own citizenship, U.S. Attorney Craig Carpenito announced.

Neeraj Sharma, 43, of Piscataway, New Jersey, is charged by complaint with one count of visa fraud and one count of naturalization fraud. Sharma is scheduled to make his initial appearance this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.

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

Sharma recruited foreign workers with purported IT expertise who sought work in the United States. When submitting the potential staffers’ H-1B visa paperwork to U.S. Citizenship and Immigrations Services, Sharma falsely represented that the foreign workers had full-time positions awaiting them at a national bank, a prerequisite to securing their visas. In fact, Sharma had never secured work for the applicants and submitted phony letters to USCIS on the bank’s letterhead with forged signatures of bank executives. The H-1B program applies to employers seeking to hire nonimmigrant aliens as workers in specialty occupations or as fashion models of distinguished merit and ability.

The visa and naturalization fraud charges carry a maximum potential penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited special agents of the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), Newark Field Office, under the direction of Special Agent in Charge Brian A. Michael, the U.S. Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka, and the U.S. CIS Office of Fraud Detection and National Security, Vermont and Newark Field Offices, with the investigation.

The government is represented by Assistant U.S. Attorney Ryan L. O’Neill of the U.S. Attorney’s Office’s Public Protection 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. – A Yonkers, New York, man who was convicted by a federal jury of possessing a firearm as a previously convicted felon was sentenced today to 77 months in prison, U.S. Attorney Craig Carpenito announced.

Francisco Vallejo, 29, was previously convicted of possessing a firearm despite his three prior felony convictions in Passaic County Superior Court. Vallejo was convicted on July 26, 2018, following a four-day trial before U.S. District Judge Susan D. Wigenton, who imposed the sentence today in Newark federal court.

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

On June 7, 2015, Vallejo was arrested in Passaic, New Jersey, after reports of a disturbance and gunshots were made to the Passaic Police Department. Responding officers detained Vallejo on the street, and thereafter located a loaded .25 caliber firearm in a nearby garbage can. A nearby security camera captured Vallejo stashing the firearm in the garbage can, and he was later found to have gunpowder residue on his hands. 

In addition to the prison term, Judge Wigenton sentenced Vallejo to three years of supervised release.

U.S. Attorney Carpenito credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Field Division, under the direction of Special Agent in Charge John B. Devito, officers of the Passaic Police Department, under the direction of Chief of Police Luis A. Guzman, and officers of the Passaic County Sheriff’s Office, under the direction of Sheriff Richard H. Berdnik, with the investigation leading to today’s sentencing.

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

NEWARK, N.J. – A Middlesex County, New Jersey, certified public accountant today admitted that he underreported his income on his personal tax return, avoiding paying more than $672,000 in taxes, U.S. Attorney Craig Carpenito announced.

Amit Govil, 58, of New Brunswick, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to Count 1 of an indictment charging him with making and subscribing a false tax return.

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

Govil, licensed as a CPA in New York and New Jersey, operated P&G Associates, a business headquartered in East Brunswick, New Jersey, providing risk management and audit services to community banks. Govil admitted that for the tax year 2010, he underreported and failed to report the gross receipts or sales of P&G Associates on Schedule C of his personal tax return, avoiding more than $672,000 in taxes.

The count of making and subscribing a false tax return carries a maximum potential penalty of three years in prison and $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 13, 2019.

U.S. Attorney Carpenito credited special agents of the IRS, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Courtney A. Howard and Catherine R. Murphy of the U.S. Attorney’s Office Economic Crimes Unit.

Defense counsel: Jeffrey Alberts Esq., New York

CAMDEN, N.J. - A Camden County, New Jersey, man today admitted his role in a Camden drug trafficking organization that distributed large amounts of crack cocaine, furanyl fentanyl and heroin, U.S. Attorney Craig Carpenito announced.

Mark Campbell, 39, a/k/a “D” and Diz,” of Sicklerville, New Jersey, pleaded guilty before U.S. District Judge Renée Marie Bumb in Camden federal court to a superseding information charging him with one count of conspiracy to distribute and possess with intent to distribute 280 grams or more of cocaine base.

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

Campbell admitted that he supplied large quantities of cocaine base (crack cocaine) to members of a drug trafficking organization operating around the 1700 block of Filmore Street in Camden. The organization also distributed heroin and furanyl fentanyl, which it obtained from other suppliers. Ten members of the drug ring were arrested in June 2017 following a long-term investigation by the FBI, which utilized multiple telephone wiretaps, surveillance, confidential informants, cooperating witnesses, more than 20 controlled drug purchases, a GPS vehicle tracker and four court-authorized search warrants, among other investigative techniques. Members of the drug trafficking organization distributed crack cocaine, furanyl fentanyl, and heroin to users and resellers in and around Camden and to people cooperating with the FBI. The investigation ultimately led to the seizure of more than 300 grams of crack cocaine, quantities of furanyl fentanyl and heroin, a firearm, and drug paraphernalia. An eleventh defendant was later charged in March 2018.

The count to which Campbell pleaded guilty carries a mandatory minimum term of 10 years in prison and a maximum of life. Sentencing is scheduled for May 13, 2019.

Six other defendants – Daron Suiter, 24; Davon Leak 20; George Williams, 44; Karim Johnson, 39, a/k/a “Chicky;” Latoya Whealton, 34, a/k/a “Toya;” and Rajai Gaines, a/k/a “Jigga,” – previously pleaded guilty.

Drug, firearm, and witness tampering charges remain pending in a third superseding indictment against four other defendants, including alleged leaders John Gunther, 35, a/k/a “Critty,” and Taleaf Gunther, 32, a/k/a “Leafy” and “L,” as well as alleged members William Roland, 37, a/k/a “Chill,” and Malcolm McCoy, 28. Trial is scheduled to begin in March 2019.

U.S. Attorney Carpenito credited special agents of the FBI’s South Jersey Violent Offender and Gang Task Force, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael Harpster; the Camden County Police Department, under the direction of Chief J. Scott Thomson; the Camden County Prosecutor’s Office, under the direction of Prosecutor Mary Eva Colalillo; and the N.J. State Police, under the direction of Col. Patrick J. Callahan, with the investigation. He also thanked the Camden County Sheriff’s Department, the Cherry Hill Police Department, and the U.S. Department of Homeland Security Investigations (HSI) for their assistance.

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

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

Defense counsel: Troy A. Archie Esq., Cinnaminson, New Jersey

NEWARK, N.J. – A Newark man, previously convicted in state court of six felonies, was found guilty in federal court today of being a felon in possession of a handgun, U.S. Attorney Craig Carpenito announced.

Jamar Battle, 31, was convicted after a three-day trial before U.S. District Judge William J. Martini in Newark of one count of being a felon in possession of a firearm and ammunition. The jury deliberated two hours before delivering the guilty verdict.

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

On the evening of July 4, 2018, Battle was involved in an argument with his girlfriend and was waiting for her outside of her home. After she arrived near her home, Battle fired six shots at the car she had been riding in as it pulled away. He did not hit his intended target, but did hit a 5-year old girl who had been walking with her father after watching a neighborhood fireworks display. The child survived the shooting but suffered a major injury that required immediate medical attention.

Prior to this shooting, Battle had been convicted of six felonies. In 2015, Battle was sentenced to New Jersey State Prison on two firearms offenses and had just been released from prison in May 2018.

The count on which Battle was convicted is punishable by a maximum of 10 years in prison and a fine of up to $250,000. Sentencing is scheduled for June 21, 2019.

U.S. Attorney Carpenito credited law enforcement officers of the Newark Police Department, under the direction of Public Safety Director Anthony F. Ambrose; special agents of the Department of Alcohol Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge John B. Devito; special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie; and the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Theodore N. Stephens 2nd, with the investigation leading to today’s guilty verdict.

The government was represented by Senior Trial Counsel Robert Frazer and Special Assistant U.S. Attorney Naazneen Khan of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

NEWARK, N.J. – Two men were indicted today for operating a heroin mill out of a penthouse apartment unit in luxury, residential high-rise tower in Fort Lee, New Jersey, U.S. Attorney Craig Carpenito announced.

Richard Fernandez, 36, and Carlos Mosquea-Diaz, 36, are charged with conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin and fentanyl. Fernandez is also charged with possession of a firearm in relation to a drug trafficking crime. 

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

On Oct. 3, 2018, Mosquea-Diaz was arrested in the parking lot of the apartment building by a vehicle that contained in its trunk a wine box containing approximately $130,000. In a trash room on the 42nd floor of the apartment building, agents recovered more than 10 kilograms of heroin and fentanyl. On the same floor, a penthouse apartment sublet by Fernandez contained a loaded firearm and several thousand dollars, as well as numerous ledgers, money counters, cutting agents, and other drug distribution and packaging paraphernalia.  

The conspiracy count with which the defendants are charged carries a mandatory minimum sentence of 10 years in prison and a maximum of life in prison, and a fine of up to $10 million. The weapons count with which Fernandez is charged carries a mandatory minimum sentence of five years in prison, and a maximum of life in prison, that must be served upon completion of any sentence for the drug offense.     

U.S. Attorney Craig Carpenito credited special agents of the Drug Enforcement Administration (DEA), under the direction of Special Agent in Charge Valerie A. Nickerson, with the investigation leading to today’s indictment.

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

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

NEWARK, N.J. – A Bergen County, New Jersey, man was arrested today for receipt of child pornography, U.S. Attorney Craig Carpenito announced.

Justin Madia, 60, of Hillsdale, New Jersey, is charged by complaint with one count of receipt of child pornography. He is scheduled to appear today before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court.

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

As early as June 9, 2018, Madia used an Internet based peer-to-peer network to request video files containing images of child pornography. On Jan. 31, 2019, law enforcement searched Madia’s residence and seized a computer and multiple electronic storage devices belonging to him. The electronic storage devices contained the peer-to-peer network software and multiple images of child pornography, including images of prepubescent children being sexually abused. 

The charge of receipt of child pornography carries a mandatory minimum potential penalty of five years in prison, a maximum potential penalty of 20 years in prison, and a $250,000 fine.

U.S. Attorney Craig Carpenito credited special agents with the FBI, under the direction of Special Agents in Charge Gregory W. Ehrie in Newark and Michael T. Harpster in Philadelphia; the Hillsdale Police Department, under the direction of Chief Robert Francaviglia; the Bergen County Prosecutor’s Office Cyber Crimes Unit, under the direction Acting Prosecutor Dennis Calo; and the N.J. Regional Computer Forensic Lab, under the direction of Director Steven Newman, with the investigation leading to the charge.

The government is represented by Assistant U.S. Attorney Sophie Reiter of the U.S. Attorney’s Office Public Protection Unit in Newark.

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

NEWARK, N.J. – A Jersey City man was sentenced today to 37 months in prison for swindling two investors of $3.4 million by falsely representing that his businesses had secured lucrative contracts to sell olive oil to major retailers, U.S. Attorney Craig Carpenito announced. 

Antonio Fasolino, 62, previously pleaded guilty before U.S. District Judge Michael Vazquez to all four counts of indictment charging him with three counts of wire fraud and one count of transacting in criminal proceeds. Judge Vazquez imposed the sentence today in Newark federal court.

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

Fasolino owned several companies that were purportedly involved in the manufacture, sale and distribution of pasta, tomato sauce, olive oil and other food products. In 2012, Fasolino obtained approximately $3.4 million from two victims by falsely representing that Fasolino’s companies had been awarded lucrative contracts to sell olive oil.

In fact, there were never any such contracts. Fasolino supplied the victims with altered bank statements and spent the money on himself, including car and mortgage payments, apartment rentals, a wedding, college tuition and credit card payments.

In addition to the prison term, Judge Vazquez sentenced Fasolino to three years of supervised release and ordered restitution of $3.4 million.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, and IRS-Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s sentencing.

The government is represented by Executive Assistant U.S. Attorney Zach Intrater and Assistant U.S. Attorney Sarah Devlin of the Assert Forfeiture and Money Laundering Unit.

NEWARK, N.J. – A Middlesex County, New Jersey, man and woman appeared in court today after being arrested for their roles in a scheme to market and distribute misbranded and unapproved new drugs, U.S. Attorney Craig Carpenito announced.

Keith Kovaleski, 54, of South Amboy, New Jersey, and Ines Maltez, 33, of Sayreville, New Jersey, were both charged by complaint with conspiring to distribute and cause the receipt and delivery of misbranded drugs and unapproved new drugs, and to impede the functions of the U.S. Food and Drug Administration (FDA). They were arrested today and appeared before U.S. Magistrate Judge Michael A. Hammer in Newark federal court. Both defendants were released on $100,000 unsecured bond.

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

The FDA is responsible for protecting the health and safety of the American public by enforcing the Federal Food, Drug, and Cosmetic Act (FDCA), a law intended to assure that drugs are safe, effective, and bear accurate labeling containing all required information. The FDA regulates the manufacture, labeling, and distribution of all drugs shipped or received in interstate commerce.

From 2014 to January 2019, Kovaleski was the principal of AA Peptide LLC, a/k/a All American Peptide (AAP). AAP used its website to market and distribute substances used by bodybuilders and others engaged in weight training to enhance performance and mitigate the side effects of performance-enhancing substances.   

The AAP website included a bogus legal disclaimer that its products were intended for laboratory research use only, and not as drugs or food. Kovaleski employed the bogus “research chemicals” disclaimer to conceal that he and others were distributing misbranded drugs and unapproved new drugs for use by their customers. 

Between April 2018 and December 2018, an undercover law enforcement agent made five purchases of misbranded drugs and unapproved new drugs from the AAP website. Each undercover purchase was made through the website without a prescription, and none of the substances purchased contained an “Rx-only” designation on their labels. None of the substances purchased from AAP contained adequate directions for use or warnings regarding known side-effects. Two of the purchases included pills containing tadalafil, the active ingredient in Cialis, in dosages significantly higher than the highest recommended dosage.    

Maltez participated in the scheme by packaging and mailing misbranded and unapproved drugs, and by receiving payments from customers.

The conspiracy charge carries a maximum potential penalty of up to five years in prison and a fine of up to $250,000 or twice the gross pecuniary gain or loss.

U.S. Attorney Craig Carpenito credited special agents of the FDA, under the direction of Special Agent in Charge Jeffrey J. Ebersole, FDA Office of Criminal Investigations’ New York Field Office; postal inspectors with the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, Newark Division, and special agents of AMTRAK Office of Inspector General, under the direction of Special Agent in Charge Michael J. Waters, Eastern Field Office, with the investigation leading to the charges. 

The government is represented by Assistant U.S. Attorneys Karen Stringer and Cari Fais of the Special Prosecutions Division.

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. – A Philadelphia, Pennsylvania, woman admitted today that she participated in a scheme to defraud banks by using stolen and altered identities to fraudulently obtain credit cards and then using those cards to make more than $2.5 million in charges that were never repaid, U.S. Attorney Craig Carpenito announced.

Fatou Djambo, 37, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to an information charging her with one count of conspiring to defraud financial institutions and one count of aggravated identity theft.

Djambo was originally charged with this conduct in a criminal complaint filed May 22, 2018, along with Talat Ali Maan, 44, of Germantown, Maryland; Syed Rehman, 51, of Jersey City, New Jersey; Kashif Idrees, 36, of Germantown, Maryland; and Jaheed Wahed Ahmed, 54, of Jersey City, New Jersey. Ahmed pleaded guilty to bank fraud conspiracy and aggravated identity theft before Judge Arleo on Jan. 9, 2019. The charges against Maan, Rehman, and Idrees remain pending. Idrees is not in custody, and is a fugitive.

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

The defendants engaged in a scheme to use stolen and fraudulently altered identities to obtain credit cards from banks and then use those credit cards to make purchases that they had no intention to repay, leaving the banks to bear the losses. The defendants stole the identities of actual people and then, in many cases, created “synthetic identities” by pairing the name and Social Security number for an actual person with a fictitious birth date. When creating the synthetic identities, the defendants often used the name and Social Security number of an actual minor and combined them with a fictitious birth date that made the identity appear to be that of an adult. 

The defendants used the stolen and synthetic identities to obtain lines of credit, primarily through opening credit card accounts at banks. The fraudulently obtained credit cards were maintained in good standing with the banks long enough to establish creditworthiness. The defendants then “busted out” the cards by making large purchases and never repaying the debts associated with those purchases. 

The defendants also incorporated and registered in various states numerous purported companies that did little or no legitimate business.  They obtained credit card processing equipment by opening merchant processing accounts in the names of the sham companies, and then used that equipment to make fraudulent charges on the fraudulent credit cards. 

Djambo’s role included arranging for individuals to obtain genuine, but fraudulently obtained, Pennsylvania driver’s licenses, a service for which Maan and Rehman paid her.  Djambo also secured addresses in the Philadelphia area to which Maan and Rehman could direct mail containing fraudulently obtained credit cards and other items relating to the scheme.  Djambo collected and delivered that mail to conspirators in Jersey City, among other locations.

The charge of conspiring to defraud financial institutions carries a maximum penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense. The aggravated identity theft charges carries a mandatory penalty of two years in prison, which must run consecutively to any other term of imprisonment imposed, and an up to $250,000 fine.

U.S. Attorney Carpenito credited special agents of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, with the investigation leading to today’s guilty plea.

The charges in the complaint are merely allegations, and Maan, Rehman, and Idrees are presumed to be innocent unless and until convicted.

The government is represented by First Assistant U.S. Attorney Rachael A. Honig.

Two Ukrainian men have been charged for their roles in a large-scale, international conspiracy to hack into the Securities and Exchange Commission’s (SEC) computer systems and profit by trading on critical information they stole.

In a 16-count indictment unsealed today in the District of New Jersey, Artem Radchenko, 27, and Oleksandr Ieremenko, 26, both of Kiev, Ukraine, are charged with securities fraud conspiracy, wire fraud conspiracy, computer fraud conspiracy, wire fraud, and computer fraud. The SEC also filed a civil complaint today charging Ieremenko along with several other individuals and entities.

The indictment alleges that Radchenko and Ieremenko hacked into the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system and stole thousands of files, including annual and quarterly earnings reports containing confidential, non-public, financial information, which publicly traded companies are required to disclose to the SEC. The defendants and others then profited by selling access to the confidential information in these reports and trading on this stolen information prior to its distribution to the investing public.

“The defendants allegedly orchestrated sophisticated computer intrusions to steal non-public information from the SEC, compromising the integrity of the market and depriving honest investors of a level playing field,” said Assistant Attorney General Benczkowski.  “The Department of Justice will aggressively pursue and prosecute those who attack our financial markets and seek to profit unfairly, no matter where such offenders reside.”

“The defendants charged in the indictment announced today engaged in a sophisticated hacking and insider trading scheme to cheat the securities markets and the investing public,” U.S. Attorney Craig Carpenito said. “They targeted the Securities and Exchange Commission with a series of sophisticated and relentless cyber-attacks, stealing thousands of confidential EDGAR filings from the Commission’s servers and then trading on the inside information in those filings before it was known to the market, all at the expense of the average investor.”

“Today’s indictment sends a strong message to those criminals who choose to use the cyber-world to profit from network intrusion,” Mark McKevitt, Special Agent in Charge of the Secret Service Newark Field Office, said. “The Secret Service will continue to aggressively investigate cyber-enabled financial crimes and develop innovative ways to combat emerging cyber threats.”

 “This indictment is a testament to the countless hours of hard work and dedication by law enforcement in the fight against cyber criminals,” FBI Special Agent in Charge Gregory W. Ehrie said.  “Cybercrime knows no boundaries. Dismantling these operations are possible only by working closely with our partners.”

According to the indictments unsealed today:

From February 2016 to March 2017, Radchenko, Ieremenko, and others conspired to gain unauthorized access to the computer networks of the SEC’s EDGAR system, which is used by publicly traded companies to file required disclosures, such as annual and quarterly earnings reports. These filings contained detailed information about the financial condition and operations of the companies, including their earnings. Such information can, and often does, affect the stock price of the companies when it is made public, and is therefore highly confidential prior to its disclosure to the general public. 

The EDGAR system allows companies to make test filings in advance of a public filing. These test filings often contain information that is the same as, or similar to the information in the final filing. The defendants stole thousands of test filings before they were released to the public, and sought to profit from their theft by using the information in the test filings to trade before the investing public learned the information. 

To gain access to the SEC’s computer networks, the defendants used a series of targeted cyber-attacks, including directory traversal attacks, phishing attacks, and infecting computers with malware. Once the defendants had access to the test filings on the EDGAR system, they stole them by copying the test filings to servers they controlled. For example, between May 2016 and October 2016, the defendants extracted thousands of test filings from the EDGAR servers to a server they controlled in Lithuania.

Ieremenko was previously charged in a hacking and securities fraud scheme in an indictment in the District of New Jersey. That indictment charged Ieremenko with being part of a large-scale, international conspiracy to hack the computer systems of three newswire organizations and steal press releases containing confidential non-public financial information relating to hundreds of companies traded on the NASDAQ and NYSE from three newswires. The members of the conspiracy profited from the theft by trading on the news ahead of its distribution to the investing public. The indictment unsealed today alleges Ieremenko employed some of the same methods to hack the SEC.   

Radchenko recruited to the scheme traders who were provided with the stolen test filings so they could profit by trading on the information before the investing public. Armed with the stolen information, the traders profited by executing various trades in brokerage accounts they controlled. In one instance, a test filing for “Public Company 1” was uploaded to the EDGAR servers at 3:32 p.m. (EDT) on May 19, 2016. Six minutes later, the defendants stole the test filing and uploaded a copy to the Lithuania server. Between 3:42 p.m. and 3:59 p.m., a conspirator purchased approximately $2.4 million worth of shares of Public Company 1. At 4:02 p.m., Public Company 1 released its second quarter earnings report and announced that it expected to deliver record earnings in 2016. Over the next day, the conspirator sold all the acquired shares in Public Company 1 for a profit of more than $270,000.

The wire fraud conspiracy and substantive wire fraud counts with which the defendants are charged carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities fraud conspiracy, computer fraud conspiracy, and substantive computer fraud counts with which the defendants are charged carry a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. 

This case was investigated by the U.S. States Secret Service and special agents of the FBI, with assistance from the SEC’s Market Abuse and Cyber Units and the Justice Department’s Office of International Affairs.

 The prosecution is being handled by Trial Attorney Aarash Haghighat of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS), and by Assistant U.S. Attorney Daniel Shapiro; Chief of the Cybercrimes Unit Justin S. Herring; Attorney-in-Charge, of the U.S. Attorney’s Office in Trenton Nicholas Grippo; and Special Assistant U.S. Attorney Lynn O’Connor.

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 Ukrainian men have been charged for their roles in a large-scale, international conspiracy to hack into the Securities and Exchange Commission’s (SEC) computer systems and profit by trading on critical information they stole, U.S. Attorney Craig Carpenito announced today.

In a 16-count indictment unsealed today Artem Radchenko, 27, and Oleksandr Ieremenko, 26, both of Kiev, Ukraine, are charged with securities fraud conspiracy, wire fraud conspiracy, computer fraud conspiracy, wire fraud, and computer fraud. The SEC also filed a civil complaint today charging Ieremenko along with several other individuals and entities.

The indictment alleges that Radchenko and Ieremenko hacked the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system and stole thousands of files, including annual and quarterly earnings reports containing confidential, non-public, financial information, which publicly traded companies are required to disclose to the SEC. The defendants and others then profited by selling access to the confidential info in these reports and trading on this stolen information prior to its distribution to the investing public.

 “The defendants charged in the indictment announced today engaged in a sophisticated hacking and insider trading scheme to cheat the securities markets and the investing public,” U.S. Attorney Craig Carpenito said. “They targeted the Securities and Exchange Commission with a series of sophisticated and relentless cyber-attacks, stealing thousands of confidential EDGAR filings from the Commission’s servers and then trading on the inside information in those filings before it was known to the market, all at the expense of the average investor.”

“The defendants allegedly orchestrated sophisticated computer intrusions to steal non-public information from the SEC, compromising the integrity of the market and depriving honest investors of a level playing field,” said Assistant Attorney General Brian Benczkowski.  “The Department of Justice will aggressively pursue and prosecute those who attack our financial markets and seek to profit unfairly, no matter where such offenders reside.”

“Today’s indictment sends a strong message to those criminals who choose to use the cyber-world to profit from network intrusion,” Mark McKevitt, Special Agent in Charge of the Secret Service Newark Field Office, said. “The Secret Service will continue to aggressively investigate cyber-enabled financial crimes and develop innovative ways to combat emerging cyber threats.”

“This indictment is a testament to the countless hours of hard work and dedication by law enforcement in the fight against cyber criminals,” FBI Special Agent in Charge Gregory W. Ehrie said.  “Cybercrime knows no boundaries. Dismantling these operations are possible only by working closely with our partners.”

According to the indictments unsealed today:

From February 2016 to March 2017, Radchenko, Ieremenko, and others conspired to gain unauthorized access to the computer networks of the SEC’s EDGAR system, which is used by publicly traded companies to file required disclosures, such as annual and quarterly earnings reports. These filings contained detailed information about the financial condition and operations of the companies, including their earnings. Such information can, and often does, affect the stock price of the companies when it is made public, and is therefore highly confidential prior to its disclosure to the general public. 

The EDGAR system allows companies to make test filings in advance of a public filing. These test filings often contain information that is the same or similar to the information in the final filing. The defendants stole thousands of test filings before they were released to the public, and sought to profit from their theft by using the information in the test filings to trade before the investing public learned the information. 

To gain access to the SEC’s computer networks, the defendants used a series of targeted cyber-attacks, including directory traversal attacks, phishing attacks, and infecting computers with malware. Once the defendants had access to the test filings on the EDGAR system, they stole them by copying the test filings to servers they controlled. For example, between May 2016 and October 2016, the defendants extracted thousands of test filings from the EDGAR servers to a server they controlled in Lithuania.

Ieremenko was previously charged in a hacking and securities fraud scheme in an indictment in the District of New Jersey. That indictment charged Ieremenko with being part of a large-scale, international conspiracy to hack the computer systems of three newswire organizations and steal press releases containing confidential non-public financial information relating to hundreds of companies traded on the NASDAQ and NYSE from three newswires. The members of the conspiracy profited from the theft by trading on the news ahead of its distribution to the investing public. The indictment unsealed today alleges Ieremenko employed some of the same methods to hack the SEC.   

Radchenko recruited to the scheme traders who were provided with the stolen test filings so they could profit by trading on the information before the investing public. Armed with the stolen information, the traders profited by executing various trades in brokerage accounts they controlled. In one instance, a test filing for “Public Company 1” was uploaded to the EDGAR servers at 3:32 p.m. (EDT) on May 19, 2016. Six minutes later, the defendants stole the test filing and uploaded a copy to the Lithuania server. Between 3:42 p.m. and 3:59 p.m., a conspirator purchased approximately $2.4 million worth of shares of Public Company 1. At 4:02 p.m., Public Company 1 released its second quarter earnings report and announced that it expected to deliver record earnings in 2016. Over the next day, the conspirator sold all the acquired shares in Public Company 1 for a profit of more than $270,000.

The wire fraud conspiracy and substantive wire fraud counts with which the defendants are charged carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities fraud conspiracy, computer fraud conspiracy, and substantive computer fraud counts with which the defendants are charged carry a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. 

U.S. Attorney Craig Carpenito credited special agents of the U.S. States Secret Service, under the direction of Special Agent in Charge Mark McKevitt, Newark Field Office; and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s indictment. He also thanked the SEC’s Market Abuse and Cyber Units under the direction of Robert Cohen, Joseph Sansone, and Carolyn Welshhans, and the Justice Department’s Office of International Affairs.

The government is represented by Assistant U.S. Attorney Daniel Shapiro; Chief of the Cybercrimes Unit Justin S. Herring; Attorney-in-Charge of the U.S. Attorney’s Office in Trenton Nicholas Grippo; Special Assistant U.S. Attorney Lynn O’Connor; and DOJ Trial Attorney Aarash Haghighat of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS).

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. – A Hoboken, New Jersey, man has been charged with promoting a voter bribery scheme by use of the U.S. mail, U.S. Attorney Craig Carpenito announced today. 

William Rojas, 68, is charged by complaint with a violation of the federal Travel Act for causing the mails to be used in aid of voter bribery contrary to New Jersey state law. He is scheduled to have his initial appearance this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court. 

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

Under New Jersey law, registered voters are permitted to cast a ballot by mail rather than in person. To receive a mail-in ballot, voters must complete and submit to their county clerk’s office an Application for Vote by Mail Ballot (VBM Application). After the application is processed by the county clerk’s office, voters receive a mail-in ballot. 

From September 2015 through November 2015, Rojas agreed to pay certain Hoboken voters $50 if those voters applied for and cast mail-in ballots for the November 2015 Hoboken municipal election. Rojas provided these voters with VBM Applications, told the voters that they would get paid $50 for casting mail-in ballots, and then delivered the completed VBM applications to the Hudson County Clerk’s office. After the mail-in ballots were delivered to the voters, Rojas went to the voters’ residences to collect the mail-in ballots and mailed the completed mail-in ballots to the Hudson County Clerk’s Office. After the election, Rojas delivered checks to these voters. Bank records show that voters living in Hoboken received $50 checks from an entity associated with the campaign that employed Rojas.

Rojas faces a maximum penalty of five years in prison and a $250,000 fine. 

U.S. Attorney Craig Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, and special agents of the U.S. Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Christina Scaringi, with the investigation leading to the charge. 

The government is represented by Assistant U.S. Attorney Sean Farrell of the U.S. Attorney’s Office’s Special Prosecutions Division and Assistant U.S. Attorney Rahul Agarwal, Deputy Chief of the Criminal Division.  

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

TRENTON, N.J. – A federal grand jury today indicted a partner at an Ocean County law firm for evasion of taxes totaling more than $1 million; filing false income tax returns; failing to pay over payroll taxes to the IRS; and making false statements on a bank loan application, First Assistant U.S. Attorney Rachael A. Honig announced.

George Gilmore, 69, of Toms River, New Jersey, was charged in a six-count indictment with one count of income tax evasion for calendar years 2013, 2014, and 2015; two counts of filing false tax returns for calendar years 2013 and 2014; failing to collect, account for, and pay over payroll taxes for two quarters in 2016, and making false statements on a 2015 loan application submitted to Ocean First Bank N.A.

According to documents filed in this case:

Gilmore worked as an equity partner and shareholder at Gilmore & Monahan P.A., a law firm in Toms River, where he exercised primary control over the firm’s financial affairs. Gilmore filed on behalf of himself and his spouse federal income tax returns declaring that he owed $493,526 for calendar year 2013, $321,470 for 2014, and $311,287 for 2015. Despite admitting that he owed taxes for each of these years, Gilmore made no estimated tax payments and failed to pay the federal individual income taxes that he owed. Rather, between January 2014 and December 2016, Gilmore spent more than $2.5 million on personal expenses, including substantial home remodeling costs, vacations, and the acquisition of antiques, artwork, and collectibles. By Dec. 31, 2016, based on the tax due and owing that Gilmore reported on the returns, he owed the IRS $1,520,329 in taxes, penalties, and interest. 

To evade and defeat the payment of his taxes Gilmore concealed information from the IRS and falsely classified income, made false and misleading statements to IRS personnel, and filed false tax returns that materially understated the true amount of income that he received from the law firm:

• From January 2014 to December 2016, Gilmore used the law firm’s bank accounts to pay more than $2 million worth of personal expenses, including obtaining checks to cash and cash advances on a corporate credit card. Gilmore falsely classified payments as “shareholder loans” instead of income to him.
• On Oct. 16, 2014, Gilmore sent the IRS a $493,526 check as payment for his 2013 taxes despite having no more than $2,500 in his personal bank account at the time. Gilmore’s check bounced and he never resubmitted payment in lieu of the bounced check. From November 2014, when he was notified by the IRS concerning the bounced check, to the end of December 2014, Gilmore spent more than $80,000 toward the construction of his home and to purchase artwork, antiques, and collectibles and more than $25,000 in mortgages and related expenses for five real estate properties that he owed.
• From November 2014 to October 2015, Gilmore falsely represented to the IRS collections officer that he would make partial payments to the IRS for his outstanding tax liability, but made none.
• Gilmore filed false tax returns for 2013 and 2014, which under reported his actual income from the law firm.

Because he exercised significant control over the law firm’s financial affairs, Gilmore was a person responsible for withholding payroll taxes from the gross salary and wages of the law firm’s employees to cover individual income, Social Security and Medicare tax obligations.  For the tax quarters ending March 31, 2016, and June 30, 2016, the law firm withheld tax payments from its employees’ checks, but Gilmore failed to pay over in full the payroll taxes due to the IRS. 

Gilmore also submitted a loan application to Ocean First Bank containing false statements. On Nov. 21, 2014, Gilmore reviewed, signed, and submitted to Ocean First Bank a Uniform Residential Loan Application (URLA) to obtain refinancing of a mortgage loan for $1.5 million with a “cash out” provision that provided Gilmore would obtain cash from the loan. On Jan. 22, 2015, Gilmore submitted another URLA updating the initial application. Gilmore failed to disclose his outstanding 2013 tax liabilities and personal loans that he had obtained from others on the URLAs. Gilmore received $572,000 from the cash out portion of the loan, the proceeds of which he did not apply to his unpaid taxes. 

The tax evasion count and the two counts of failing to collect, account for, and pay over payroll taxes each carry a maximum penalty of five years in prison, and a $250,000 fine, or twice the gross gain or loss from the offense. The two counts of filing a false tax return each carry a maximum penalty of three years in prison, and a $250,000 fine, or twice the gross gain or loss from the offense. The count alleging loan application fraud carries a maximum penalty of 30 years in prison and a $1 million fine. Gilmore will be arraigned at a date to be determined.

First Assistant U.S. Attorney Honig credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, special agents with U.S. Attorney’s Office under the direction of Supervisory Special Agent Thomas Mahoney, and special agents of the FBI Red Bank Resident Agency, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, for the investigation leading to today’s indictment.

The government is represented by Deputy U.S. Attorney Matthew J. Skahill; Assistant U.S. Attorney Jihee G. Suh of the U.S. Attorney’s Office Special Prosecutions Division; and Trial Attorney Thomas F. Koelbl of the U.S. Department of Justice - Tax Division. 

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

NEWARK, N.J. – A certified public accountant from New York today admitted filing a tax return in his own name that contained materially false information, U.S. Attorney Craig Carpenito announced.

Christopher Miu, 58, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to an information charging him with one count of subscribing to a tax return that he knew substantially understated his gross income.

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

Between 2008 and 2014, Miu failed to file income tax returns own his own behalf. When he ultimately filed returns for those years, Miu substantially under-reported his gross income, leading to a tax loss to the United States of more than $550,000.

The count to which Miu pleaded guilty carries a maximum potential statutory penalty of three years in prison, and a fine of up to $100,000. Miu has also agreed to resolve his tax due and owing with the IRS. Sentencing is scheduled for April 25, 2019.

U.S. Attorney Carpenito credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan R. Tafur, with the investigation leading to today’s guilty plea.

The government is represented by Senior Trial Counsel Andrew Leven of the Healthcare & Government Fraud Unit of the U.S. Attorney’s Office, District of New Jersey.

TRENTON, N.J. – The chief executive officer of a publicly traded microcap company was sentenced today to 52 months in prison for orchestrating a multimillion-dollar securities fraud scheme using false reports with the U.S. Securities and Exchange Commission, U.S. Attorney Craig Carpenito announced.

Cary Lee Peterson, 38, of Phoenix, Arizona, was previously found guilty of all three counts of an indictment charging him with two counts of false certification in SEC filings and one count of securities fraud. He was convicted following a two-week trial before U.S. District Judge Anne E. Thompson, who imposed the sentence today in Trenton federal court.

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

Peterson, as CEO of RVPlus Inc., filed numerous false reports with the SEC, including:

• On Aug. 21, 2012, Peterson falsely certified on SEC Form 8-K that RVPlus had entered into a contract worth $1.8 billion with the Ministry of Environment for Katsina State within the Federal Republic of Nigeria to provide unspecified green energy products and services.

• On Nov. 16, 2013, Peterson falsely certified on SEC Form 8-K that RVPlus had entered into a contract worth $90 million with the Commission of the Foreign Affairs to the Senate for the Republic of Haiti.

• On Dec. 21, 2012, Peterson falsely certified on Form 10-Q that RVPlus held $8,653,846 in short-term accounts receivable for services rendered under the Nigeria agreement, despite prior warnings from RVPlus’ auditors that reporting these receivables as revenue was improper.
   
• On Dec. 27, 2012, Peterson falsely certified on SEC Form 8-K that RVPlus had entered into a contract worth $10.5 million with the Federal Ministry of Planning & Economic Affairs for the Republic of Liberia.
   
• On March 28, 2013, Peterson falsely certified on SEC Form 10-Q that RVPlus held $17,590,837 in short-term accounts receivable from, among other sources, the Haiti and Liberia agreements.

The SEC suspended trading in RVPlus on July 19, 2013, due to questions concerning the accuracy of RVPlus’ periodic financial filings, including reported accounts receivable, assets, and operations.

Peterson also claimed that ECCO2 Corp., a not-for-profit owned by Peterson was an “affiliate organization” of the U.N. Convention on Climate Change. Peterson claimed that “[t]his status held with the sectors of the United Nations opens many windows of opportunity to over $100 billion in financial aid to fund ECCO2 projects.”  ECCO2 was never an affiliate of the U.N. Convention on Climate Change. In fact, the U.N. wrote to Peterson on two separate occasions demanding that ECCO2 stop claiming that it was.

In addition to the prison term, Judge Thompson sentenced Peterson to three years of supervised release and ordered him to pay restitution of $250,167.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation. He also thanked FBI special agents under the direction of Special Agent in Charge John F. Bennett in San Francisco for their assistance with Peterson’s arrest, and the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Regional Director Marc P. Berger and Senior Associate Regional Director Sanjay Wadhwa, for its assistance. 

The government is represented by Assistant U.S. Attorney Ari Fontecchio of the U.S. Attorney’s Office Criminal Division and Executive Assistant U.S. Attorney Zach Intrater.

NEWARK, N.J. – A Passaic County, New Jersey, woman and man were sentenced today to federal prison terms for their respective roles in conspiring to distribute thousands of pills containing heroin in New Jersey, U.S. Attorney Craig Carpenito announced.

Karen Rojas, 28, of Paterson, New Jersey, was sentenced today to 21 months in prison; Juan Vidal, 34, of Paterson, was sentenced on Dec. 18, 2018, to 30 months in prison. Both had previously pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to informations charging them with conspiring to distribute and possess with intent to distribute more than 100 grams of substances containing heroin.

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

At their residence in Paterson, Rojas and Vidal manufactured pills that were made with heroin and that were made to resemble Percocet pills. Vidal used a press to make the pills and Rojas then sold the pills for approximately $5 dollars per pill. Between February 2018 and April 2018, Vidal manufactured, and Rojas sold, thousands of pills that were manufactured by Vidal.

On April 18, 2018, for example, in a recorded transaction, Rojas was asked by a cooperating witness for 100-150 heroin pills. Rojas sold the cooperating witness 40 heroin pills, for approximately $200, and Rojas indicated that Vidal needed to “get supplies,” meaning to purchase more heroin, in order to make additional pills.

In addition to the prison terms, Judge Walls sentenced each defendant to four years of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to the sentencings.

The government is represented by Assistant U.S. Attorney Rahul Agarwal, Deputy Chief of the Criminal Division.

Defense counsel: Rojas: Paul Uhlik Esq., Clifton, New Jersey
Vidal: Frank Sciro Esq., Paterson

NEWARK, N.J. – A City of Paterson, New Jersey, police officer was arrested today and charged with violating the civil rights of a driver and passenger during a motor vehicle stop, U.S. Attorney Craig Carpenito announced.

Police Officer Matthew Torres, 30, of Paterson, was arrested by federal agents this morning and charged by complaint with conspiring to deprive individuals of civil rights under color of law. Torres is scheduled to have his initial appearance this afternoon before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.

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

Torres and other Paterson police officers, including Eudy Ramos, have without justification stopped and searched motor vehicles and stolen cash and other items from the occupants. The officers sometimes used fake paperwork to trick individuals into believing that the cash seizures and vehicle stops were legitimate.

For example, on Dec. 7, 2017, Torres and Ramos conducted a vehicle stop in Paterson, searched the vehicle, driver, and passenger and placed the driver in one police car and the passenger in the other. The passenger told Torres and Ramos that he possessed two bags of marijuana and $3,100. Ramos took the money, placed it on the backseat of the vehicle and told the passenger that he did not care about the marijuana. Ramos told the passenger that they could not simply let him go because his activity likely had been picked up by Paterson police cameras. Ramos said he and Ramos could take $500 from the passenger, have him sign a piece of paper, and then give that paper to the narcotics division. Ramos then placed a call, purportedly to his superior, and told the passenger that the superior officer said it had to be $800. Ramos took out a piece of white paper, wrote something on it, and told the passenger to sign it. The passenger did not know what was written on the paper. Afterwards, Torres and Ramos released the driver and passenger. According to the passenger, there was $1,000 missing from his original $3,100. Torres and Ramos shared the stolen cash proceeds. They did not report the illegal cash seizure to the Paterson Police Department.

The conspiracy to violate civil rights charge carries a maximum penalty of 10 years in prison and a fine of up to $250,000.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory Ehrie in Newark, with the investigation leading to today’s arrest. He also thanked the Passaic County Prosecutor’s Office, under the direction of Passaic County Prosecutor Camelia M. Valdes, the Paterson Police Department, under the direction of Paterson Police Director Jerry Speziale and Police Chief Troy Oswald, and the Paterson Police Department Office of Internal Affairs, for their assistance in the investigation.

The government is represented by Assistant U.S. Attorney Rahul Agarwal, Deputy Chief of the Criminal Division.

NEWARK, N.J. – A Totowa, New Jersey, man was sentenced today to 27 months in prison for knowingly possessing a firearm as a previously convicted felon and trying to bring a loaded gun onto a plane, U.S. Attorney Craig Carpenito announced.

Laron L. James, a/k/a/ “Juelz Santana,” 36, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to both counts of an indictment charging him with possession of a firearm by a convicted felon and carrying a weapon on an aircraft. Judge Chesler imposed the sentence today in Newark federal court.

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

James admitted that on March 9, 2018, he knowingly possessed a loaded Derringer .38 caliber handgun despite the fact he was prohibited from possessing firearms due to his December 2012 conviction in Bergen County Superior Court for manufacturing and distributing a controlled dangerous substance. James also admitted that on that date, he attempted to bring the loaded gun onto a flight from Newark to San Francisco. The gun was discovered during the X-Ray screening of James’s luggage before he could board the flight.

In addition to the prison term, Judge Chesler sentenced James to one year of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory Ehrie in Newark, and officers of the Port Authority Police Department, under the direction of Superintendent Edward Cetnar, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Desiree Grace Latzer of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

Defense counsel: Brian J. Neary Esq., Hackensack, New Jersey

NEWARK, N.J. – A Kenvil, New Jersey, man was sentenced today to 12 months and one day in prison for conspiring with a former Middlesex Borough fire inspector to use threats of violence to extort cash payments from the owner of a real estate development company, U.S. Attorney Craig Carpenito announced.

Joseph P. Martinelli, 65, previously pleaded guilty before U.S. District Judge Madeline Cox Arleo to an information charging him with conspiring to commit extortion using threats of force, violence, and fear. Judge Arleo imposed the sentence today in Newark federal court.

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

From December 2016 through June 2017, Martinelli conspired with Billy A. Donnerstag, 49, of Hackettstown, New Jersey, then a fire inspector for Middlesex Borough and other New Jersey municipalities, to extort the owner and operator of a real estate development and construction company, referred to in the information as “Individual 1,” using threats of physical harm if Individual 1 did not pay Martinelli and Donnerstag thousands of dollars.

Martinelli and Donnerstag agreed that the pretext for demanding money would be that Individual 1 supposedly didn’t pay enough for a property he bought from Martinelli in 2007. In a series of telephone and in-person conversations with Individual 1, Martinelli and Donnerstag demanded money from Individual 1 by suggesting that Individual 1 would be physically harmed by Donnerstag if Individual 1 refused.

Martinelli and Donnerstag obtained $15,000 in cash from Individual 1 over two separate meetings. The cash had been provided by the FBI. Donnerstag previously pleaded guilty and was sentenced on Oct. 23, 2018, to 34 months in prison.

In addition to the prison term, Judge Arleo sentenced Martinelli to three years of supervised release, one year of which will be home incarceration.
U.S. Attorney Carpenito credited special agents with the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s sentencing.

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

Defense counsel: Brian N. DiGiacomo Esq., Madison, New Jersey

NEWARK, N.J. – A Bergen County, New Jersey, man who was arrested with three kilograms of heroin, a loaded, stolen Glock 22 pistol with a high-capacity magazine, and tens of thousands of dollars in cash in his possession made his initial court appearance today in Newark federal court, U.S. Attorney Craig Carpenito announced.

Jose Pena, a/k/a “Gucci,” 31, of Cliffside Park, New Jersey, is charged by complaint with one count of conspiracy to distribute one kilogram or more of heroin. He appeared in court today before U.S. Magistrate Judge Steven C. Mannion and was detained.

According to the complaint:

On Dec. 17, 2018, law enforcement observed Pena driving into a public garage near the Botanical Gardens in Bronx, New York, where law enforcement suspected that Pena stored substantial quantities of narcotics in a minivan for distribution.

On Dec. 18, 2018, Pena drove from Cliffside Park to the garage, parked next to the minivan and entered it. When officers approached, they saw a brownish beige powdery substance at various places inside the minivan, including numerous softball-sized bags of suspected heroin. A field test of one of the bags was positive for heroin.

Law enforcement officers found the stolen pistol, loaded with 13 bullets in a large capacity magazine, in a backpack within reach of where Pena had been sitting. They also found tens of thousands of dollars in cash in a secret compartment behind the radio and temperature controls of the minivan.

The heroin distribution conspiracy charge carries a mandatory minimum penalty of 10 years in prison, a maximum of life imprisonment, and a $10 million fine.

U.S. Attorney Carpenito credited special agents of the DEA, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, as well as the DEA New York Strike Force, with the investigation leading to the charge.

The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the U.S. Attorney’s Office Organized Crime Drug Enforcement Task Force/Narcotics Unit in Newark.

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

Defense counsel: Jay Heinrich Esq., Bronx, New York

NEWARK, N.J. – A City of Paterson police officer today admitted conspiring with other officers to violate individuals’ civil rights and to personally accepting a firearm in exchange for reducing the charges on an arrestee, U.S. Attorney Craig Carpenito announced.

Police Officer Jonathan Bustios, 29, of Paterson, New Jersey, pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with one count of conspiracy to violate individuals’ civil rights and one count of extortion under color of official right.

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

Bustios and Eudy Ramos were police officers with the Paterson Police Department. From at least 2016 to April 2018, Bustios, Ramos and others participated in a conspiracy in which they targeted and stopped certain individuals who were driving motor vehicles that they believed carried sums of money. Bustios, Ramos and others stopped the vehicles, searched the vehicles, driver, and passengers, and seized cash from the driver and passengers of the vehicles, without legal basis. They then split the cash among themselves and submitted false reports to the Paterson Police Department omitting the illegal vehicle stops and their thefts or lying about them.

In one incident, on Feb. 20, 2018, while on duty and in uniform, Bustios pulled over and stopped behind a BMW, while Ramos stopped in front of the BMW. Bustios and Ramos exited their police cars and searched the front and back of the BMW and the trunk, and Bustios and Ramos detained and searched the two occupants of the BMW. They put each of the occupants into the backseat of Ramos’s police car. Bustios then stole a bag containing approximately $1,800 from the car and left the scene, and Ramos released the two detained occupants of the BMW. Ramos drove to meet Bustios, who passed a portion of the recovered cash to Ramos through the window of Bustios’ police car. Bustios and Ramos did not report to the Paterson Police Department the fact that they had stopped and searched the BMW, detained and searched its occupants, and taken cash, all without any warrants or legal justification.

Bustios also pleaded guilty to extortion under color of official right, arising out of an incident on March 14, 2018. Bustios arrested and detained an individual and placed the individual in the backseat of his police car. Bustios told the individual that he would not charge him with resisting arrest and would allow him to keep the cash that the he had on him, in exchange for which the individual would find Bustios a firearm. Bustios said, “I ain’t gonna charge you with resisting, and I’m letting you keep your money, bro.” Bustios then told the individual, “If you don’t wanna make the deal, you don’t have to make the deal.” The individual ultimately agreed to the deal and directed Bustios to the location of a firearm. Bustios recovered the firearm and kept it without turning it in to the Paterson Police Department. As promised, he did not charge the individual with resisting arrest. Bustios also submitted an arrest report in which he failed to mention any details about having a recovered a firearm.

The conspiracy to violate civil rights count carries a maximum penalty of 10 years in prison. The extortion under color of official right count carries a maximum penalty of 20 years in prison. The maximum fine for both charges is $250,000. Sentencing is scheduled for April 9, 2019.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea. He also thanked the Passaic County Prosecutor’s Office, under the direction of Passaic County Prosecutor Camelia M. Valdes, the Paterson Police Department, under the direction of Paterson Police Director Jerry Speziale and Police Chief Troy Oswald, and the Paterson Police Department Office of Internal Affairs, for their assistance in the investigation.

The government is represented by Assistant U.S. Attorney Rahul Agarwal, Deputy Chief of the Criminal Division.

Defense counsel: Michael Koribanics, Clifton, New Jersey

NEWARK, N.J. – A Hawthorne, New Jersey, man today admitted his role in a scheme to defraud financial institutions and others of more than $6 million, U.S. Attorney Craig Carpenito announced.

Mehdi Kassai, also known as “Mike Kassai,” 36, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to an information charging him with two counts of bank fraud, one count of wire fraud, and one count of money laundering.

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

From June 2013 to March 2017, Kassai and others fraudulently induced mortgage lenders to participate in “short sale” transactions. In the typical short sale transaction, a financial institution agrees to allow a house owner in financial distress to sell for less than they owe on the mortgage. Such transactions are called short sales because the market value of the house is less than the amount owed by the owner and the lender agrees to accept a payment “short” of the amount owed by the house owner.

Kassai admitted that he used false documents and straw buyers, caused cosmetic damage to properties to lower their apparent value, and restricted the ability of others to bid and buy those properties. This allowed Kassai to gain control of properties through the short sale process for substantially less than the properties were actually worth. Kassai then sold many of those properties to third parties at a substantial profit.

The bank fraud and wire fraud counts are punishable by up to 30 years in prison and a fine of $1 million, or twice the gross gain to the defendant or loss to the victim. The count of money laundering is punishable by up to 10 years in prison and a fine of $250,000, or twice the gross gain or loss. Kassai also agreed to forfeit the proceeds of the scheme. Sentencing is scheduled for April 18, 2019.

U.S. Attorney Carpenito credited officers of the Bergen County Prosecutor’s Office, under the direction of Acting Prosecutor Dennis Calo, and special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Acting Special Agent in Charge Robert Manchak, with the investigation leading to today’s guilty plea.

The government is represented by Senior Trial Counsel Andrew Leven of the Healthcare & Government Fraud Unit of the U.S. Attorney’s Office, District of New Jersey, and Special Assistant U.S. Attorneys Charlie Divine and Kevin DiGregory of the Federal Housing Finance Agency, Office of Inspector General.

Defense counsel: James M. Doyle Esq., Hackensack, New Jersey

NEWARK, N.J. – An Essex County, New Jersey, man was sentenced today to 252 months in prison for robbing 14 hotels in New Jersey and New York, U.S. Attorney Craig Carpenito announced today.

Tremone Burnett, 46, of Orange, New Jersey, pleaded guilty before U.S. District Court Judge Katharine S. Hayden in Newark federal court on Sept. 12, 2018, to two counts of an indictment charging him with one count of conspiracy to commit robbery and threaten physical violence, and one count of using a firearm during a crime of violence. Judge Hayden imposed the sentence today in Newark federal court.

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

From April 24, 2014, through June 19, 2014, Burnett robbed 12 New Jersey hotels and two New York hotels at gunpoint. The New Jersey hotels were located in Carteret, Lebanon, Newark, Rockaway, Secaucus, Avenel, Parsippany, Paramus, Weehawken, and Edison; the New York hotels were located in Airmont and Nanuet. In each robbery, Burnett wielded a handgun and, in some instances, tied the victim’s hands and feet. During one of the robberies, Burnett discharged his firearm.

In addition to the prison term, Judge Hayden sentenced Burnett to five years of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Theodore N. Stephens II; and the Newark Department of Public Safety, under the direction of Public Safety Director Anthony F. Ambrose, with the investigation leading to today’s guilty plea. He also thanked the Carteret, Edison, Lebanon, Rockaway, Parsippany, Weehawken and Woodbridge Township police departments in New Jersey; the Clarkstown and Ramapo police departments in New York; the N.J. State Police; and the Bergen County, Hunterdon County, Middlesex County, and Morris County prosecutors’ offices for their work on this case.

The government is represented by Assistant U.S. Attorney Stephen Ferketic of the U.S. Attorney’s Office Public Protection Unit in Newark.

Defense counsel: Chester Keller Esq., Assistant Federal Public Defender, Newark

NEWARK, N.J. – A Lakewood, New Jersey, insurance producer was charged today with conspiring to defraud several Blue Cross Blue Shield health care insurance affiliates of more than $10 million, U.S. Attorney Craig Carpenito announced today.

Jonas Knopf, 63, of Lakewood, was charged by complaint with one count of conspiring to defraud three health care Blue Cross Blue Shield (BCBS) affiliates in Pennsylvania and the Washington, D.C., area. He is scheduled to appear today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.

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

From 2009 to 2017, Knopf was the chief executive officer of Madison Financial Services (MFS) and a licensed insurance producer – a person who is licensed to sell insurance products. MFS was the parent company of 11 sham companies created by Knopf and others solely for the purpose of marketing health insurance coverage to people who were not, in fact, his employees. These companies purported to be located and doing business in Pennsylvania and/or Virginia, and created the appearance of employment status for hundreds of individuals, largely Lakewood residents who were seeking health care coverage through BCBS benefit plans. The conspiracy began in Pennsylvania, and lasted until 2013, when an internal BCBS investigation uncovered irregularities in the information submitted by Knopf and others through his sham companies. Ultimately, the Pennsylvania Department of Insurance initiated an investigation and Knopf surrendered his Pennsylvania insurance producer’s license and ceased operation in the state. The conspiracy, however, continued in Virginia.

Knopf’s clients or purported employees paid him inflated insurance premiums as well as providing him with monies for payroll; Knopf, in turn, issued fake payroll checks, giving the false impression that they were actually employees being paid for services rendered. The conspiracy continued until January 2017. The conspiracy caused the health care insurers to pay out more than $10 million in fraudulent claims.

The count of conspiracy to commit health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent In Charge Gregory W. Ehrie; special agents of the U.S. Department of Labor, Office of Inspector General, Office of Investigations, New York Region, under the direction of Special Agent in Charge Michael Mikulka; investigators of the U.S. Department of Labor, Employee Benefit Security Administration (EBSA), under the direction of Regional Director Darren Cohen, and the Ocean County Prosecutor's Office, under the direction of Bradley D. Bilhimer, with the investigation leading to today’s charge.

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

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

Defense counsel: Michael Gilbert Esq., New York

NEWARK, N.J. – A Colonia, New Jersey, man was arrested in his home today on charges that he distributed images of child sexual abuse, U.S. Attorney Craig Carpenito announced.

James A. Gabany, 36, is charged by complaint with one count of distributing child pornography. He made his initial appearance today before U.S. Magistrate Court Judge Steven C. Mannion in Newark federal court. He was released to a third-party custodian with home detention and electronic monitoring.

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

Gabany used peer-to-peer file sharing on his computer to distribute files containing images and videos of child sexual abuse, including images of prepubescent children.    

The charge of distributing child pornography carries a mandatory minimum sentence of five years in prison, a maximum potential penalty of 20 years in prison, and a $250,000 fine. 

U.S. Attorney Craig Carpenito credited special agents of Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Brian Michael, with the investigation leading to today’s charges and arrest.

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

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

NEWARK, N.J. – An investment manager with an office in Middletown, New Jersey, has been convicted of running a Ponzi scheme, concealing losses, faking investment returns, and stealing more than $10 million in investor money, U.S Attorney Craig Carpenito announced today.

Vicent P. Falci, 59, of Middletown, was convicted of all four counts of a superseding indictment: three counts of wire fraud and one count of securities fraud. He was convicted Dec. 13, 2018, following a two-week trial before U.S. District Judge Anne E. Thompson in Trenton federal court. The jury deliberated for 90 minutes before returning the verdict.

According to the superseding indictment and evidence at trial:

Falci controlled a number of investment funds under the names “Saber Funds” and “Vicor Tax Receivables LLP.” The Saber Funds were a collection of investment funds that Falci created and operated, starting in the early 2000s. Many of his earliest victims were friends, family, and associates. Falci served as a fire chief in Middletown, and some victims were policemen, fireman, and retirement funds for first responders. The Saber Funds grew to have more than 200 investors from whom the defendant raised more than $10 million.

Falci falsely told investors that the Saber Funds were conservatively invested in tax liens – which generated high returns with little risk. In reality, Falci diverted investor money to himself, his family, and to other companies he controlled. Some of the diverted funds were used for riskier ventures, such as day trading and real estate. Falci concealed losses and his own theft from investors. Based on these misrepresentations, investors continued to entrust additional funds to Falci and left previous investments under his control.

In early 2012, Falci started the Vicor Fund, targeting wealthier investors with greater sophistication in financial affairs. The investors in the Vicor Fund included financial industry professionals, and Falci ultimately raised $20 million from these victims. He again falsely represented that he had experience and a track record of success investing in tax liens, and promised that he could produce high rates of return with little risk. In reality, the assets of the Vicor Fund were rapidly depleted by Falci’s theft. 

In order to support his own lifestyle and repay investors the gains he had promised, Falci stole more than $10 million from the Vicor Fund between 2012 and 2016. At the same time, he reported fake investment gains to his investors on monthly statements. Falci concealed his theft in several ways, including by diverting funds to a fake company that he created to steal from investors. He also forged emails and reports, and created fake assets for the fund.

Each charge of wire fraud carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The charge of securities fraud carries a maximum potential penalty of 20 years in prison and a $5 million fine. Sentencing is scheduled for March 21, 2018.

U.S. Attorney Carpenito credited inspectors of U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, with the investigation leading to today’s verdict. He also thanked the N.J. Bureau of Securities in the State Attorney General’s Office, under the direction of Attorney General Gurbir Grewal and Bureau Chief Christopher Gerrold, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorneys Justin Herring, Chief of the Cybercrimes Unit, and Paul A. Murphy, Chief of the Economic Crimes Unit, of the U.S. Attorney’s Office Criminal Division in Newark.

TRENTON, N.J. – An insurance broker with an office in Fort Lee, New Jersey, today admitted defrauding Horizon Blue Cross Blue Shield, U.S. Attorney Craig Carpenito announced.

Lawrence Ackerman, 54, a resident of Old Tappan, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to a superseding information charging him with one count of health care fraud.

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

Ackerman was the chief operating officer of Atlantic Business Associates (ABA) and Atlantic Medical Associates (AMA), two “shell” companies through which he marketed health insurance nationally to people who were not his employees and therefore ineligible for health coverage. During the month of January 2011, he delivered $481,500 in health care benefits to ineligible participants.

The count of health care fraud to which Ackerman pleaded guilty is punishable by a maximum penalty of 10 years in prison and a fine of $250,000. Ackerman was originally charged in a two-count indictment with conspiracy to defraud Horizon Blue Cross Blue Shield of $5.6 million and the welfare fund of Local 2326 of $1 million in fraudulent health care claims. Under terms of the plea agreement, Ackerman will be responsible for making full restitution to Horizon and to the union’s benefit plan for their losses. Sentencing is scheduled for March 20, 2019.

U.S. Attorney Carpenito credited special agents of the Department of Labor, Office of the Inspector General, under the direction of Special Agent in Charge Michael Mikulka; agents of the Office of Employee Benefit Security Act (EBSA), under the direction of Regional Director Darren Cohen; and agents of the Office of Labor Management Standards (OLMS), under the supervision of Regional Director Andriana Vamvakas.

The government is represented by Senior Litigation Counsel V. Grady O’Malley of the Organized Crime/Gangs Unit and Assistant U.S. Attorney Sammi Malek of the Narcotics/OCDETF unit in Newark.

NEWARK, N.J. – U.S. Attorney Craig Carpenito announced that three New Jersey police agencies were among 75 agencies nationwide to receive federal grant for body-worn camera programs, part of more than $56 million in grants awarded by the Department of Justice’s Office of Justice Programs (OJP) to enhance state and local law enforcement safety and wellness.

The Pemberton Township Police Department, the N.J. State Park Police and the N.J. Department of Law and Public Safety were awarded grants under OJP’s Bureau of Justice Assistance Body-Worn Camera Program. Divided into four categories, these awards provide law enforcement agencies with resources to pilot, establish or enhance comprehensive body-worn camera programs. Funding will enable grantees to improve their capacity to gather evidence and protect the safety of law enforcement officers and citizens.

“Body-worn cameras are just one of the technologies available for our state and local law enforcement partners to better protect members of the public and the officers who are out there doing a dangerous job day in and day out,” U.S. Attorney Carpenito said. “Combined with the most up-to-date training, bulletproof vests, and continuing health and safety research, these grants will help our police in their most important job, which is keeping the public safe.”

Pemberton was awarded a grant of $75,000, the N.J. State Park Police was awarded $132,000, and the N.J. Department of Law and Public Safety was awarded $940,278. The grants were announced recently by Acting Attorney General Matthew Whitaker. OJP’s Bureau of Justice Assistance and National Institute of Justice awarded the grants to law enforcement departments, local jurisdictions, and training, technical assistance and research organizations throughout the United States. The funds will be used to provide services designed to protect officers and improve overall public safety.

The Office of Justice Programs, led by Principal Deputy Assistant Attorney General Matt M. Dummermuth, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six bureaus and offices: the BJA; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP and its components can be found at: www.ojp.gov

Defendants Allegedly Inflated Company’s Value and Revenue to Defraud Investors

NEWARK, N.J. – The former CEO, CFO and two directors of a publicly traded healthcare services company were indicted today for allegedly orchestrating a widespread scheme to defraud investors and others out of hundreds of millions of dollars in connection with a merger transaction designed to convert the company into a private entity, U.S. Attorney Craig Carpenito announced.

Parmjit Parmar, a/k/a “Paul Parmar,” 48; Sotirios Zaharis, a/k/a “Sam Zaharis,” 51; Ravi Chivukula, 44; and Pavandeep Bakhshi, 41, are charged in a three-count indictment with conspiracy to commit securities fraud, securities fraud, and wire fraud. Parmar, Zaharis, and Chivukula were first charged by complaint in May 2018. Bakhshi was charged with the same offenses in a separate criminal complaint in September 2018, which was unsealed earlier this week following his arrest at JFK Airport after he arrived from London. Zaharis and Chivukula remain fugitives.

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

From May 2015 through September 2017, Bakhshi and conspirators Parmjit Parmar, a/k/a “Paul Parmar,” Sotirios Zaharis, a/k/a “Sam Zaharis,” and Ravi Chivukula orchestrated an elaborate scheme to defraud a private investment firm and others out of hundreds of millions of dollars in connection with the funding of a transaction to take private a healthcare services company (Company A) traded publicly on the London Stock Exchange’s Alternative Investment Market. To fund the transaction, the private investment firm put up $82 million and a consortium of financial institutions put up another $130 million. The scheme utilized fraudulent methods to grossly inflate the value of Company A and trick others into believing that Company A was worth substantially more than its actual value.

To present a positive picture of the company’s financial wealth, the conspirators allegedly sought to raise tens of millions of dollars in the public markets, purportedly to fund Company A’s acquisitions of various operating subsidiaries. In reality, a number of those entities either did not exist or had only a fraction of the operating income attributed to them. The conspirators allegedly funneled the proceeds of these secondary offerings through bank accounts they controlled and used the money for a variety of purposes that had nothing to do with acquiring the purported targets. The money from one of the offerings was instead used to make it appear as if the operating subsidiary had substantial customer revenue when, in fact, the funds were simply transfers of the money that had been raised in the secondary offering. The conspirators went to great lengths to make it appear that these funds were revenue, concocting phony customers and altering bank statements to make it appear as if the funds were coming from customers.

The conspirators allegedly:

• Created fictitious operating companies that Company A purportedly acquired in sham acquisitions.
• Falsified and fabricated bank records of subsidiary entities in order to generate a phony picture of Company A’s revenue streams.
• Generated fake income streams and phony customers of Company A and its subsidiaries.
• Made material misrepresentations and omissions to the private investment firm and others.

The defendants’ alleged actions caused the private investment firm and others to value Company A at more than $300 million for purposes of financing the transaction to take the company private.
The alleged scheme was uncovered in September 2017, when the conspirators resigned from their positions with Company A or were terminated. On March 16, 2018, Company A and numerous of its affiliated entities filed for bankruptcy, attributing the company’s financial demise, in large part, to the fraud scheme.

The conspiracy count with which the defendant is charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities fraud count carries a maximum potential penalty of twenty years in prison and a $5,000,000 fine.

The United States filed a criminal complaint against Parmar, Zaharis and Chivukula on May 16, 2018 for their roles in the scheme. Zaharis and Chivukula currently are fugitives. The United States also filed a separate civil complaint on the same date seeking forfeiture of four properties that Parmar owns or controls, including a house in Colt’s Neck and three apartments in New York City. Separately, the U.S. Securities and Exchange Commission filed a civil complaint on May 16th against Parmar, Zaharis and Chivukula.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie, with the investigation which led to today’s charges. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Regional Director Marc P. Berger and Associate Regional Director Lara S. Mehraban, for its assistance.

The government is represented by Paul A. Murphy, Chief of the U.S. Attorney’s Office’s Economic Crimes Unit, Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit, Trial Attorney Leslie Lehnert, Money Laundering and Asset Recovery Section, Department of Justice, and Assistant U.S. Attorney Sarah Devlin of the U.S. Attorney’s Office’s Asset Recovery Money Laundering Unit.

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. – A Secaucus, New Jersey, woman was arraigned today on charges of holding a Sri Lankan national against her will and for years forcing the victim to work without pay as a domestic servant, U.S. Attorney Craig Carpenito announced.

Alia Imad Faleh Al Hunaity, a/k/a “Alia Al Qaterneh,” 43, of Secaucus, New Jersey, was indicted Dec. 4, 2018, on charges of forced labor, alien harboring, and marriage fraud. She was arraigned today before U.S. District Judge Robert Kugler in Camden federal court and entered a plea of not guilty to the charges. She remains free on $150,000 unsecured bond.

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

Hunaity brought the victim to the United States on a temporary visa in 2009 for the victim to perform domestic services. Hunaity caused the victim to overstay the victim’s visa, and the victim remained in the United States illegally, living exclusively with Hunaity for more than nine years. Hunaity forced the victim to work without pay, and limited the victim’s interactions with the outside world. In 2018, Hunaity forced the victim to marry Hunaity for the purpose of obtaining legal residence for the victim so that the victim could continue to work without pay for Hunaity.

Hunaity was arrested on Sept.19, 2018, and made her initial appearance that day before U.S. Magistrate Court Judge Cathy L. Waldor.

The forced labor charge carries a maximum penalty of 20 years in prison, and the alien harboring and marriage fraud charges each carry a maximum penalty of five years in prison. The charges subject Hunaity to a fine of $250,000, or twice the gross gain to the defendant or twice the gross loss to others, whichever is greater.

U.S. Attorney Craig Carpenito credited special agents from U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Special Agent in Charge Brian Michael, with the investigation leading to the indictment.

The government is represented by Assistant U.S. Attorney Andrew Macurdy of the U.S. Attorney’s Office 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.

Defense counsel: Robert Kovic Esq., Hackensack, New Jersey

NEWARK, N.J. – A former Bergen County, New Jersey, man was arrested today in Park City, Kansas, on charges that he defrauded at least 20 people by soliciting investments in what he claimed were highly successful financial instruments, but which was actually a Ponzi scheme, U.S. Attorney Craig Carpenito announced.

Thomas Lanzana, 51, formerly of Midland Park, New Jersey, and now residing in Pawleys Island, South Carolina, was charged by complaint with one count each of wire fraud and commodities fraud. He is scheduled to have his initial court appearance today in Wichita federal court.

According to the criminal complaint:

As early as 2013, Lanzana fraudulently solicited approximately $900,000 from at least 20 customers to invest in algorithm-based trading pools in foreign currency derivatives (forex) and other financial instruments. He falsely claimed to prospective customers that he was a successful forex trader. Lanzana allegedly took several steps to keep his customers’ trust: he sent them false account statements; he posted false monthly account statements to his companies’ websites showing balances, some in excess of $800,000, for forex trading accounts that did not exist; and he sent false tax documents to customers reporting earnings that did not exist.

Lanzana misappropriated at least $350,000 in customer funds, using some to repay earlier investors in the manner of a Ponzi scheme, and to pay for his personal expenses, including purchases on Amazon, payments to a luxury car dealer and a jewelry retailer, and golf expenses.

The count of mail fraud with which Lanzana is charged carries a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss caused by the scheme. The count of commodities fraud carries a maximum potential penalty of 10 years in prison and a fine of $1 million, or twice the gross gain or loss.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie, and special agents of IRS-Criminal Investigation, under the direction of John R. Tafur, with the investigation leading to the arrest. He also thanked the U.S. Commodity Futures Trading Commission’s Division of Enforcement for its role in the investigation.

The government is represented by Assistant U.S. Attorney David W. Feder of the U.S. Attorney’s Office’s Cyber Crime Unit.

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

CAMDEN, N.J. – An Atlantic County, New Jersey, man today admitted defrauding New Jersey state health benefits programs out of millions of dollars by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito announced.

Corey Sutor, 37, of Egg Harbor Township, New Jersey, a Ventnor firefighter, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with conspiracy to commit health care fraud.

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

Compounded medications are supposed to be 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.

Sutor was one of the owners of a company formed to market prescription compounded medications, referred to as Company 1. From May 2015 through February 2016, Sutor and others associated with the company persuaded individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications.

The conspirators learned that certain compound medication prescriptions – including pain, scar, and antifungal creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. The conspirators also learned that the New Jersey State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents, would cover compound medication prescriptions.

Sutor and his conspirators entered into an agreement in which Company 1 would receive a percentage of the amounts paid to compounding pharmacies for prescriptions secured by Sutor and his conspirators. Sutor and his conspirators then recruited public employees, offered them hundreds of dollars per month, and persuaded them to agree to obtain prescription compounded medications without any examination by a medical professional. Sutor would obtain insurance and personal information from the public employees and give that information to conspirators. Company 1 then would receive a percentage of the amounts paid on these fraudulent prescriptions, which Sutor and others would divide.

Sutor and his conspirators caused New Jersey to pay more than $2 million in fraudulent claims for compounded medications for public employees.

Sutor received $150,398 in gross proceeds for his role in the scheme. As part of his plea agreement, Sutor must forfeit these criminal proceeds and pay restitution of at least $2,092,791.

Sutor faces a maximum 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 March 12, 2019.

U.S. Attorney Carpenito credited special agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark; special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur 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 today’s guilty plea. 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 Eileen Schlindwein Den Bleyker, for its assistance in the investigation.

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

Defense counsel: Robert Wolf Esq., Westmont, New Jersey

NEWARK, N.J. – Two North Jersey men were charged today for their respective roles in a conspiracy that used stolen credit cards removed from the mail by U.S. Postal Service (USPS) employees to defraud banks that issued the cards, U.S. Attorney Craig Carpenito announced.

Olagoke Araromi, 22, of Union, New Jersey, and Elhadj Fofana, of Orange, New Jersey, are charged by complaint with one count each of bank fraud conspiracy and aggravated identity theft. Araromi is additionally charged with one count of giving bribes to USPS employees. Araromi was arrested this morning and had his initial appearance this afternoon before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court. Fofana remains at large.

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

From July 2017 to May 2018, Araromi and others conspired to steal credit cards that banks mailed to accountholders by bribing USPS employees to remove envelopes containing credit cards from the mail. Araromi and others paid USPS employees cash for credit cards that the USPS employees had removed from the mail. Text messages between Araromi and USPS employees showed Araromi instructing USPS employees to look for and take credit cards issued by certain banks that he preferred, promising to pay the USPS employees for taking as many credit cards as possible, and arranging meetings to pick up the stolen credit cards. 

From July 2017 to February 2018, Araromi, Fofana, and others then used the stolen credit cards to make unauthorized purchases of retail goods, such as Apple MacBook Pro devices and other Apple products, throughout New Jersey and New York, causing financial losses to the banks that issued the credit cards. Surveillance video recordings and photos from these various retail stores showed the defendants making these unauthorized transactions with the stolen credit cards. 

One of Araromi’s and Fofana’s conspirators, Moussa Dagno, was previously charged by complaint and is currently detained. 

The bank fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a $1 million fine. The aggravated identity theft charge carries a mandatory sentence of two years in prison, which must run consecutive to any other term imposed. The bribery charge is punishable by a maximum potential penalty of 15 years in prison and a $250,000 fine.  

U.S. Attorney Carpenito credited special agents with the USPS-Office of Inspector General, under the direction of Special Agent in Charge Matthew Modafferi, Northeast Area Field Office, and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, with the investigation leading to today’s complaint.

The government is represented by Assistant U.S. Attorneys Jihee G. Suh and Tazneen Shahabuddin of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

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

NEWARK, N.J. – A Hudson County, New Jersey, man was arrested today and charged with a scheme that allegedly caused $1 million in losses by using fake passports to open bank accounts into which he and others deposited phony IRS refund checks, U.S. Attorney Craig Carpenito announced.

Mamadou Diallo, 42, of Jersey City, New Jersey, is charged by complaint with one count of conspiracy to commit bank fraud and two counts of passport fraud. He appeared today before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court. Diallo was released on $500,000 bond.

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

From June 2012 through the present, Diallo and others conspired to fraudulently obtain money from four banks. They created false passports from various West African countries by affixing their own pictures onto passports bearing names other than their own. The conspirators then opened bank accounts using the doctored passports as photo identification. They deposited fraudulent checks bearing the routing number for the U.S. Treasury and then withdrew the funds. The losses associated with the conspiracy exceed $1 million.

The count of conspiracy to commit bank fraud carries a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense. The passport fraud charges each carry a maximum potential penalty of 15 years in prison.

U.S. Attorney Carpenito credited inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn; special agents of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Brian Michael; the U.S. Department of Treasury-Office of Inspector General, under the direction of Inspector General Eric Thorson; and the New York State Department of Taxation and Finance.

The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the U.S. Attorney’s Office Organized Crime and Drug Enforcement Task Force / Narcotics 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.

Olympus Medical Systems Corporation (Olympus) and a former senior executive in Japan pleaded guilty today in Newark, New Jersey, to failing to file required adverse event reports involving infections connected to duodenoscopes, and to continuing to sell the duodenoscopes in the United States despite those failures, the Justice Department announced today.

Olympus, which is located in Tokyo, Japan, and Hisao Yabe, 62, of Japan, both entered guilty pleas before U.S. District Court Judge Stanley R. Chesler in Newark Federal Court: Olympus to three counts, and Yabe to one count, of distributing misbranded medical devices in interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act (FDCA). 

Judge Chesler also imposed sentence on the company today – fining Olympus $80,000,000 and ordering $5,000,000 in criminal forfeiture, consistent with a plea agreement between Olympus and the Justice Department.  Olympus must also abide by an agreement with the Justice Department requiring Olympus to enact extensive compliance reforms.

Yabe is scheduled to be sentenced by Judge Chesler on March 27, 2019. Yabe faces a maximum potential penalty of a year in prison and a $100,000 fine, or twice the gain or loss from the offense.

Olympus admitted that it failed to file with the Food and Drug Administration (FDA) required adverse event reports in 2012 and 2013 relating to three separate events involving infections in Europe connected to Olympus’s TJF-Q180V duodenoscope (Q180V): the infection of approximately 22 patients with Pseudomonas aeruginosa at the Erasmus Medical Center in the Netherlands in early 2012; the infection of three patients with Escherichia coli at Clinique de Bercy in France in November 2012; and the infection of five patients with Pseudomonas aeruginosa at Kremlin Bicetre in France in July 2012.

Yabe admitted his own personal responsibility for the failure to file the necessary information with FDA relating to the Erasmus Medical Center infections.  At the time, Yabe was Olympus’s Division Manager for the Quality and Environment Division – Olympus’s top regulatory official, whose responsibilities included adverse event reporting in the United States. 

“Medical devices, such as the Olympus duodenoscope that is used in 500,000 procedures per year in the United States, can extend and improve the quality of life for many people,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.  “But when a device manufacturer becomes aware of risks that could lead to illness, injury, or death, there is a statutory obligation to report that information to the FDA in a timely manner. By failing to do so, Olympus and Mr. Yabe put patients’ health at risk.”   

“Olympus and Yabe failed to file important FDA reports regarding adverse events,” Attorney for the United States Rachael Honig, District of New Jersey, said. “It is especially troubling that they remained quiet when they received additional information from an independent expert questioning the safety of Olympus’ device. Patient safety must always be a paramount concern for medical device companies, and these defendants simply failed to treat that concern with the gravity it deserves. Today’s resolution is a reminder that this office will act whenever patient safety is put at risk by a quest for profits.”

“Medical device adverse event reporting requirements are designed to protect Americans by providing FDA with a tool to detect potential safety issues.  When device manufacturers fail to report adverse events, unsuspecting patients are placed at risk,” said FDA Commissioner Scott Gottlieb, M.D. “We take our patient safety mission very seriously and we remain fully committed to aggressively pursuing those who jeopardize public health by subverting FDA’s regulatory requirements.”

Olympus’s and Yabe’s Failure to File Required Adverse Event Reports

To enable FDA and others to identify and monitor adverse events, the FDCA requires medical device manufacturers to file adverse event reports – known as Medical Device Reports (MDRs) – when the manufacturer becomes aware of information that reasonably suggests that the manufacturer’s device may have caused or contributed to a death or serious injury.  The FDCA also requires manufacturers to file supplemental MDRs if they subsequently obtain information about the event that was not known or available when the initial MDR was filed.

Olympus today admitted that it failed to make the required initial MDR filing regarding the Kremlin Bicetre infections, and failed to file required supplemental MDRs relating to the Erasmus Medical Center and Clinique de Bercy infections, for which Olympus had filed initial MDRs.  Under the FDCA, devices for which required MDRs and supplemental MDRs have not been filed are deemed misbranded, and it is a crime to ship such devices in interstate commerce.  Between August 2012 and October 2014, Olympus shipped hundreds of misbranded duodenoscopes in the United States, generating approximately $40 million in revenue and approximately $33 million in total gross profit.  Olympus’s payment of $85 million is more than 2½ times Olympus’s total profit from sales of the misbranded duodenoscopes.

Yabe admitted today that he was aware of Olympus’s obligation to file supplemental MDRs and was involved in Olympus’s failure to file a supplemental MDR regarding the Erasmus Medical Center infections and a report Olympus received prepared by an independent expert of Delft University of Technology in the Netherlands.  That expert report – which Olympus obtained in the summer of 2012 – noted numerous problems with the Q180V, including that the Q180V’s tip had various cracks, corners, and crevices that could harbor bacteria and could be cleaned only with great difficulty.  The report recommended immediate further investigation of all such scopes, updating the cleaning instructions, and improving the quality of the seals. 

Additional Compliance Measures

As part of its plea agreement with the Justice Department, Olympus has agreed to: retain an independent MDR expert to inspect and review Olympus’s policies and procedures to determine their compliance with the MDR requirements of the FDCA and its implementing regulations; periodic review by the MDR expert of Olympus’s continued compliance with the MDR requirements of the FDCA and its implementing regulations; and conduct a review and audit of the device classification and market pathway for all endoscope device types manufactured by Olympus that are intended for use in the sterile body cavity and that are currently sold in the United States.  The MDR expert will report back to FDA and the Justice Department periodically for three years.  In addition, the President of Olympus and Olympus’s Board of Directors will periodically conduct a review of Olympus’s MDR compliance measures and classification/marketing pathway review and provide certifications to FDA and the Justice Department relating to those reviews.  Olympus also is obligated to inform health care providers in the United States who received Q180Vs between August 2012 and October 2014 of Olympus’s plea today, and to provide information to those health care providers regarding Olympus’s failure to file the required MDRs.

In March 2016, Olympus Corp. of the Americas and Olympus Latin America, two separate subsidiaries of Olympus Corp., entered into deferred prosecution agreements (DPAs) and civil settlements with the U.S. Attorney’s Office for the District of New Jersey and the Justice Department’s Civil Division to resolve criminal and civil charges and civil claims relating to schemes between 2006-2011 to pay kickbacks to doctors and hospitals in the United States and violate the Foreign Corrupt Practices Act in Latin America. The DPAs are scheduled to expire in March 2019. While the unlawful conduct at issue in today’s resolution terminated in October 2014 – a year and a half before the government entered into the DPAs – conduct relating to violations of the FDCA and failure to file MDRs was specifically not covered by the March 2016 resolution, as the investigation into the FDCA violations was ongoing at that time.

The guilty pleas are the culmination of an investigation conducted by special agents from FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Jeffrey J. Ebersole of the New York Field Office, along with special agents from the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie.

The government is represented in the criminal case by Assistant U.S. Attorneys Jacob T. Elberg and R. David Walk, Jr. of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, and Senior Litigation Counsel Patrick Jasperse of the Justice Department’s Consumer Protection Branch, with the assistance of Senior Counsel Shannon M. Singleton of the FDA’s Office of Chief Counsel.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the District of New Jersey, visit its website at www.justice.gov/usao-nj.

Corporation to Pay $85 Million, Enact Compliance Reforms

NEWARK, N.J. – Olympus Medical Systems Corporation (Olympus) and a former senior executive in Japan pleaded guilty today in Newark, New Jersey, to failing to file required adverse event reports involving infections connected to duodenoscopes, and to continuing to sell the duodenoscopes in the United States despite those failures, the Justice Department announced today.

Olympus, which is located in Tokyo, Japan, and Hisao Yabe, 62, of Japan, both entered guilty pleas before U.S. District Court Judge Stanley R. Chesler in Newark Federal Court: Olympus to three counts, and Yabe to one count, of distributing misbranded medical devices in interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act (FDCA).

Judge Chesler also imposed sentence on the company today – fining Olympus $80,000,000 and ordering $5,000,000 in criminal forfeiture, consistent with a plea agreement between Olympus and the Justice Department. Olympus must also abide by an agreement with the Justice Department requiring Olympus to enact extensive compliance reforms.

Yabe is scheduled to be sentenced by Judge Chesler on March 27, 2019. Yabe faces a maximum potential penalty of a year in prison and a $100,000 fine, or twice the gain or loss from the offense.

Olympus admitted that it failed to file with the Food and Drug Administration (FDA) required adverse event reports in 2012 and 2013 relating to three separate events involving infections in Europe connected to Olympus’s TJF-Q180V duodenoscope (Q180V): the infection of approximately 22 patients with Pseudomonas aeruginosa at the Erasmus Medical Center in the Netherlands in early 2012; the infection of three patients with Escherichia coli at Clinique de Bercy in France in November 2012; and the infection of five patients with Pseudomonas aeruginosa at Kremlin Bicetre in France in July 2012.

Yabe admitted his own personal responsibility for the failure to file the necessary information with FDA relating to the Erasmus Medical Center infections. At the time, Yabe was Olympus’s Division Manager for the Quality and Environment Division – Olympus’s top regulatory official, whose responsibilities included adverse event reporting in the United States.

“Medical devices, such as the Olympus duodenoscope that is used in 500,000 procedures per year in the United States, can extend and improve the quality of life for many people,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “But when a device manufacturer becomes aware of risks that could lead to illness, injury, or death, there is a statutory obligation to report that information to the FDA in a timely manner. By failing to do so, Olympus and Mr. Yabe put patients’ health at risk.”

“Olympus and Yabe failed to file important FDA reports regarding adverse events,” Attorney for the United States Rachael Honig, District of New Jersey, said. “It is especially troubling that they remained quiet when they received additional information from an independent expert questioning the safety of Olympus’ device. Patient safety must always be a paramount concern for medical device companies, and these defendants simply failed to treat that concern with the gravity it deserves. Today’s resolution is a reminder that this office will act whenever patient safety is put at risk by a quest for profits.”

“Medical device adverse event reporting requirements are designed to protect Americans by providing FDA with a tool to detect potential safety issues. When device manufacturers fail to report adverse events, unsuspecting patients are placed at risk,” said FDA Commissioner Scott Gottlieb, M.D. “We take our patient safety mission very seriously and we remain fully committed to aggressively pursuing those who jeopardize public health by subverting FDA’s regulatory requirements.”

Olympus’s and Yabe’s Failure to File Required Adverse Event Reports

To enable FDA and others to identify and monitor adverse events, the FDCA requires medical device manufacturers to file adverse event reports – known as Medical Device Reports (MDRs) – when the manufacturer becomes aware of information that reasonably suggests that the manufacturer’s device may have caused or contributed to a death or serious injury. The FDCA also requires manufacturers to file supplemental MDRs if they subsequently obtain information about the event that was not known or available when the initial MDR was filed.

Olympus today admitted that it failed to make the required initial MDR filing regarding the Kremlin Bicetre infections, and failed to file required supplemental MDRs relating to the Erasmus Medical Center and Clinique de Bercy infections, for which Olympus had filed initial MDRs. Under the FDCA, devices for which required MDRs and supplemental MDRs have not been filed are deemed misbranded, and it is a crime to ship such devices in interstate commerce. Between August 2012 and October 2014, Olympus shipped hundreds of misbranded duodenoscopes in the United States, generating approximately $40 million in revenue and approximately $33 million in total gross profit. Olympus’s payment of $85 million is more than 2½ times Olympus’s total profit from sales of the misbranded duodenoscopes.

Yabe admitted today that he was aware of Olympus’s obligation to file supplemental MDRs and was involved in Olympus’s failure to file a supplemental MDR regarding the Erasmus Medical Center infections and a report Olympus received prepared by an independent expert of Delft University of Technology in the Netherlands. That expert report – which Olympus obtained in the summer of 2012 – noted numerous problems with the Q180V, including that the Q180V’s tip had various cracks, corners, and crevices that could harbor bacteria and could be cleaned only with great difficulty. The report recommended immediate further investigation of all such scopes, updating the cleaning instructions, and improving the quality of the seals.

Additional Compliance Measures

As part of its plea agreement with the Justice Department, Olympus has agreed to: retain an independent MDR expert to inspect and review Olympus’s policies and procedures to determine their compliance with the MDR requirements of the FDCA and its implementing regulations; periodic review by the MDR expert of Olympus’s continued compliance with the MDR requirements of the FDCA and its implementing regulations; and conduct a review and audit of the device classification and market pathway for all endoscope device types manufactured by Olympus that are intended for use in the sterile body cavity and that are currently sold in the United States. The MDR expert will report back to FDA and the Justice Department periodically for three years. In addition, the President of Olympus and Olympus’s Board of Directors will periodically conduct a review of Olympus’s MDR compliance measures and classification/marketing pathway review and provide certifications to FDA and the Justice Department relating to those reviews. Olympus also is obligated to inform health care providers in the United States who received Q180Vs between August 2012 and October 2014 of Olympus’s plea today, and to provide information to those health care providers regarding Olympus’s failure to file the required MDRs.

In March 2016, Olympus Corp. of the Americas and Olympus Latin America, two separate subsidiaries of Olympus Corp., entered into deferred prosecution agreements (DPAs) and civil settlements with the U.S. Attorney’s Office for the District of New Jersey and the Justice Department’s Civil Division to resolve criminal and civil charges and civil claims relating to schemes between 2006-2011 to pay kickbacks to doctors and hospitals in the United States and violate the Foreign Corrupt Practices Act in Latin America. The DPAs are scheduled to expire in March 2019. While the unlawful conduct at issue in today’s resolution terminated in October 2014 – a year and a half before the government entered into the DPAs – conduct relating to violations of the FDCA and failure to file MDRs was specifically not covered by the March 2016 resolution, as the investigation into the FDCA violations was ongoing at that time.

The guilty pleas are the culmination of an investigation conducted by special agents from FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Jeffrey J. Ebersole of the New York Field Office, along with special agents from the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie.

The government is represented in the criminal case by Assistant U.S. Attorneys Jacob T. Elberg and R. David Walk, Jr. of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, and Senior Litigation Counsel Patrick Jasperse of the Justice Department’s Consumer Protection Branch, with the assistance of Senior Counsel Shannon M. Singleton of the FDA’s Office of Chief Counsel.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch.

NEWARK, N.J. – An Indian national has been arrested on charges that he conspired to smuggle foreign nationals into the United States via commercial airline flights, New Jersey U.S. Attorney Craig Carpenito announced today.

Bhavin Patel, 38, of India, was arrested by special agents of the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) on Dec. 7, 2018 at Newark Liberty International Airport. He is charged by indictment with one count of conspiracy to bring in and harbor aliens and six counts of smuggling foreign nationals into the United States for private financial gain and is scheduled to be arraigned Dec. 18, 2018, before U.S. District Judge John Michael Vazquez.

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

HSI learned that a smuggling operation run by Patel was attempting to find methods to illegally smuggle foreign nationals from India into the United States. The investigation revealed that the smuggling organization recruited Indian nationals and others to pay fees in exchange for passage to the United States.

Beginning in October 2013, an undercover law enforcement officer posing as a smuggler began meeting with Patel in Bangkok, Thailand. Patel told the undercover law enforcement officer that he wanted to smuggle Indian nationals into the United States. On three occasions, Patel or his conspirator transported the Indian nationals to an airport in Thailand, at which point the undercover law enforcement officer would purportedly use his contacts to smuggle them into the United States via commercial airline flights. Patel agreed to wire down payments for each individual to be smuggled into the United States and to pay a balance of tens of thousands of dollars for each individual once the foreign nationals arrived in the United States. Over the ensuing months, Patel arranged for six Indian nationals to be brought to Thailand for smuggling into the United States via Newark Liberty International Airport.

The conspiracy charge carries a maximum potential sentence of 10 years in prison. Each substantive charge of smuggling carries a maximum potential sentence of five years in prison.

U.S. Attorney Carpenito credited special agents of HSI, under the direction of Special Agent in Charge Brian Michael in Newark, with the investigation leading to the arrest.

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

The Defendant And His Conspirators Allegedly Inflated Company’s Value and Revenue to Defraud Investors

NEWARK, N.J. – A former member of the board of directors of a publicly traded healthcare services company was arrested at John F. Kennedy (JFK) International Airport over the weekend for allegedly participating in a widespread scheme to defraud investors and others out of hundreds of millions of dollars in connection with a merger transaction designed to convert the company into a private entity, U.S. Attorney Craig Carpenito for the District of New Jersey and Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division announced.

Pavandeep Bakhshi, 41, of the United Kingdom, is charged by complaint with one count of conspiracy to commit securities fraud and one count of securities fraud. Bakhshi was arrested Saturday evening at JFK Airport after arriving on a flight from London. He is scheduled to appear today before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court.

According to the complaint unsealed this weekend:

From May 2015 through September 2017, Bakhshi and co-conspirators Parmjit Parmar, aka “Paul Parmar,” Sotirios Zaharis, aka “Sam Zaharis,” and Ravi Chivukula allegedly orchestrated an elaborate scheme to defraud a private investment firm and others out of hundreds of millions of dollars in connection with the funding of a transaction to take private a healthcare services company (Company A) traded publicly on the London Stock Exchange’s Alternative Investment Market. To fund the transaction, the private investment firm put up $82 million and a consortium of financial institutions put up another $130 million. The scheme allegedly utilized fraudulent methods to grossly inflate the value of Company A and trick others into believing that Company A was worth substantially more than its actual value.

The complaint alleges that to present a positive picture of the company’s financial wealth, the conspirators allegedly sought to raise tens of millions of dollars in the public markets, purportedly to fund Company A’s acquisitions of various operating subsidiaries. In reality, the complaint alleges, a number of those entities either did not exist or had only a fraction of the operating income attributed to them. The conspirators allegedly funneled the proceeds of these secondary offerings through bank accounts they controlled and used the money for a variety of purposes that had nothing to do with acquiring the purported targets. The money from one of the offerings was instead used to make it appear as if the operating subsidiary had substantial customer revenue when, in fact, the funds were simply transfers of the money that had been raised in the secondary offering, the complaint alleges. The conspirators allegedly went to great lengths to make it appear that these funds were revenue, concocting phony customers and altering bank statements to make it appear as if the funds were coming from customers.

The conspirators allegedly:

• Created fictitious operating companies that Company A purportedly acquired in sham acquisitions; • Falsified and fabricated bank records of subsidiary entities in order to generate a phony picture of Company A’s revenue streams; • Generated fake income streams and phony customers of Company A and its subsidiaries; and
• Made material misrepresentations and omissions to the private investment firm and others.

The defendants’ alleged actions caused the private investment firm and others to value Company A at more than $300 million for purposes of financing the transaction to take the company private.

The alleged scheme was uncovered around September 2017, when the conspirators resigned from their positions with Company A or were terminated. On March 16, Company A and numerous of its affiliated entities filed for bankruptcy, attributing the company’s financial demise, in large part, to the fraud scheme.

The United States filed a criminal complaint against Parmar, Zaharis and Chivukula on May 16 for their alleged roles in the scheme. Zaharis and Chivukula currently are fugitives. The United States also filed a separate civil complaint on the same date seeking forfeiture of four properties that Parmar owns or controls, including a house in Colt’s Neck and three apartments in New York City. Separately, the U.S. Securities and Exchange Commission filed a civil complaint on May 16 against Parmar, Zaharis and Chivukula.

The investigation was conducted by the FBI. The U.S. Securities and Exchange Commission’s New York Regional Office provided assistance in the investigation.

The case is being prosecuted by Chief Paul A. Murphy of the U.S. Attorney’s Office’s Economic Crimes Unit, Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit and Assistant U.S. Attorney Sarah Devlin of the U.S. Attorney’s Office’s Asset Recovery Money Laundering Unit and Trial Attorney Leslie Lehnert of the Criminal Division’s Money Laundering and Asset Recovery Section.

The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Defense counsel: Alex Spiro Esq., New York

NEWARK, N.J. – A member of the New Jersey Grape Street Crips was sentenced today to 35 years in prison for his role in a racketeering conspiracy that included a double murder, a separate attempted murder, and conspiring to distribute heroin, U.S. Attorney Craig Carpenito announced.

Ahmad Manley, a/k/a “Fresh,” a/k/a “Moddy G,” 32, was convicted at trial of eight counts in a sixth superseding indictment, including RICO conspiracy, attempted murder in aid of racketeering, and using firearms during crimes of violence and drug trafficking crimes. The jury returned the verdict on the fourth day of deliberations following a two-month trial before U.S. District Judge Madeline Cox Arleo, who imposed the sentence today in Newark federal court.

Manley was charged in November 2016 in a 22-count indictment charging 14 members and associates with seven murders, numerous attempted murders, and numerous other violent and drug trafficking crimes committed as part of the racketeering conspiracy. Thirteen of the 14 defendants charged in the indictment have been convicted and one is awaiting trial.

Another 66 members and associates of the Grape Street Crips who were arrested in a coordinated takedown in May 2015 were separately charged with drug-trafficking, physical assaults, and witness intimidation, and all have been convicted.

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

Acting on the orders Corey Hamlet, a/k/a “C-Blaze,” the leader of the New Jersey Grape Street Crips, Manley and other gang-members targeted Almalik Anderson, the gang’s chief rival, for violence after Anderson had refused to pay Hamlet’s extortion demands.

In October 2013, Hamlet met with Anderson at the Short Hills mall to discuss the dispute between the two men. After the Short Hills meeting, Hamlet used a social media account to post a report from the Essex County Prosecutor’s Office purportedly indicating that Anderson had provided a statement to law enforcement. Just three days after Hamlet’s social media post, Manley and other gang members – acting on Hamlet’s orders – repeatedly shot and nearly killed Anderson and Saidah Goines, who was inside Anderson’s car.

After the attempt to kill Anderson failed, Hamlet ordered the murder of Maurice Green, the younger brother of Almalik Anderson. On March 3, 2014, Hamlet and Manley pulled up to a car being driven by Green and two other individuals. Although Hamlet aimed a firearm at Green and the car’s other occupants, Green pulled off before any shots were fired. A short time later, however, Manley found Green, and a car chase ensued. The chase ended when Green’s car crashed into other vehicles at the busy intersection of Irvine Turner Boulevard and Spruce Street in Newark, and Manley and others fired numerous shots in the direction of Green’s vehicle.  Green was shot, and Wesley Childs, a passenger in Green’s car, was killed. Velma Cuttino, an innocent bystander who was a passenger in one of the vehicles involved in the crash, was shot and killed.

In addition to orchestrating these acts of violence, Manley conspired with other gang members to distribute one kilogram or more of heroin.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, and special agents of the DEA, under the direction of Special Agent in Charge Valerie A. Nickerson with the investigation. He also thanked the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Theodore N. Stephens II, police officers and detectives of the Newark Police Department, under the direction of Public Safety Director Anthony F. Ambrose, and the Essex County Sherriff’s Office, under the direction of Armando B. Fontoura, for their assistance.

The case is being prosecuted by Osmar J. Benvenuto, Chief of the Organized Crime and Gangs Unit and Assistant U.S. Attorney Richard J. Ramsay of the Appeals Division in Newark.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies. 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 defendant who is awaiting trial are merely accusations, and he is presumed innocent unless and until convicted.

CAMDEN, N.J. – A Camden man today admitted his role in a drug trafficking organization that distributed crack cocaine and fentanyl, U.S. Attorney Craig Carpenito announced.

Davon Leak, 20, pleaded guilty before U.S. District Judge Renée Marie Bumb in Camden federal court to a superseding information charging him with one count of conspiracy to distribute and possess with intent to distribute 28 grams or more of cocaine base.

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

Leak admitted that he sold crack cocaine and fentanyl, a synthetic opioid, around the 1700 block of Filmore Street in Camden. Leak also admitted that he prepared and packaged drugs for sale. Ten members of the drug ring were initially arrested in June 2017 following a long-term investigation by the FBI, which utilized telephone wiretaps, surveillance, confidential informants, cooperating witnesses, more than 20 controlled drug purchases, a GPS vehicle tracker and four court-authorized search warrants. Members of the drug trafficking organization distributed crack cocaine, fentanyl, and heroin to users and resellers in and around Camden and to people cooperating with the FBI. The investigation ultimately led to the seizure of more than 300 grams of crack cocaine, quantities of fentanyl and heroin, a firearm, and drug paraphernalia. After the initial arrests, Leak was charged in March 2018.

The count to which Leak pleaded guilty carries a mandatory minimum term of five years in prison, a maximum of 40 years in prison and a $5 million fine. Sentencing is scheduled for March 11, 2019.

Five other defendants – Daron Suiter, 24, George Williams, 44, Latoya Whealton, a/k/a “Toya,” 34, and Rajai Gaines, a/k/a “Jigga,” 36, and Karim Johnson, a/k/a “Chicky” – have previously pleaded guilty. Suiter was sentenced on Aug. 9, 2018, to five years in prison. Johnson was sentenced on Nov. 27, 2018, to 10 years in prison. The other defendants are awaiting sentencing.

Drug and firearm charges remain pending in a second superseding indictment against five other defendants, including alleged leaders John Gunther, a/k/a “Critty,” 35; and Taleaf Gunther, a/k/a “Leafy” and “L,” 32; as well as alleged members William Roland, a/k/a “Chill,” 36; Mark Campbell, a/k/a “D” and “Diz,” 28; and Malcolm McCoy, 26.

U.S. Attorney Carpenito credited special agents of the FBI’s South Jersey Violent Offender and Gang Task Force, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael Harpster; the Camden County Police Department, under the direction of Chief J. Scott Thomson; the Camden County Prosecutor’s Office, under the direction of Prosecutor Mary Eva Colalillo; and the N.J. State Police, under the direction of Col. Patrick J. Callahan, with the investigation. He also thanked the Camden County Sheriff’s Department, the Cherry Hill Police Department, and the U.S. Department of Homeland Security Investigations (HSI) for their assistance.

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

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

Defense counsel: Teri Lodge Esq., Marlton, New Jersey

NEWARK, N.J. – A City of Paterson police officer today admitted concealing the assault of an attempted suicide victim by another police officer at St. Joseph’s Medical Center in Paterson, U.S. Attorney Craig Carpenito announced.

Police Officer Roger Then, 29, of Paterson, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to Count 4 of the indictment against him, charging him with misprision of felony, for concealing the civil rights crime committed by his partner, Ruben McAusland.

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

Then and McAusland were police officers with the Paterson Police Department. On March 5, 2018, they responded to a call from an attempted suicide victim. The victim called 911 and was taken by the Paterson Fire Department to St. Joseph’s Medical Center. Then and McAusland responded to the victim’s residence and subsequently followed the Fire Department to the hospital to monitor the victim.

Two videos captured some of the events that took place in the hospital that night. In the first video, captured by hospital surveillance, the victim was in a wheelchair. McAusland was standing at the hospital admissions desk. The victim appeared to throw an object down the hallway. McAusland, looking angry, pushed the victim’s wheelchair with his hands and punched the victim in the face. As the victim fell towards the ground, still in the wheelchair, Then grabbed the victim by the back of the neck and further pushed the victim to the ground. Then reached for his handcuffs, but McAusland told Then not to handcuff the individual and McAusland further stated, “I got this.”

In the second video, taken by Then, using his cellular telephone, the victim was on his back in a hospital bed. The victim said, “Right here? See my cheek?” McAusland said, “You have the right guy today.” Then turned the camera toward himself and smiled. Then next turned the camera back towards the victim and McAusland. The victim said, “Ha, ha, bitch.” McAusland responded, “I’m a what?” The victim said, “Do it.” McAusland put on a pair of hospital gloves and proceeded to violently strike the victim twice across the face. McAusland then stood over the victim and said, “I ain’t fucking playing with you.” The victim covered his face with his hands and was silent. McAusland continued, “Calm your ass down.” Rather than intervening to stop McAusland’s assault of the victim, Then recorded it.

Then and McAusland submitted a police report in connection with the events of March 5, 2018. The police report did not mention that McAusland punched the victim and that Then grabbed the victim by the neck and pushed the victim towards the ground, as captured in the first video. The police report also did not mention that McAusland violently struck the victim, twice, in a hospital room, as depicted in the second video. Nor did the police report mention that Then had recorded the second assault on his cell phone and failed to intervene to stop it from happening.

The victim suffered multiple injuries to his face, including an eye injury that required surgery, as a result of these assaults.

McAusland previously pleaded guilty to possessing with intent to distribute narcotics and deprivation of civil rights under color of law. He is awaiting sentencing.

The misprision of felony count carries a maximum penalty of three years in prison and a maximum fine of $250,000. Sentencing is scheduled for March 12, 2019.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea. He also thanked the Passaic County Prosecutor’s Office, under the direction of Passaic County Prosecutor Camelia M. Valdes, the Paterson Police Department, under the direction of Paterson Police Director Jerry Speziale and Police Chief Troy Oswald, and the Paterson Police Department Office of Internal Affairs for their assistance in the investigation.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal, Deputy Chief of the Criminal Division, and Lee M. Cortes Jr., Deputy Chief of the Special Prosecutions Division.

Defense counsel: John P. McGovern Esq., Newark

Another violent gang-member member sentenced to 25 years

NEWARK, N.J. – A high-ranking member of the New Jersey Grape Street Crips was sentenced today to two concurrent terms of life – plus 35 years – in federal prison for committing a murder, participating in a separate attempted murder, and conspiring to distribute heroin, all as part of a racketeering conspiracy, U.S. Attorney Craig Carpenito announced.

Another Grape Street Crips gang member was sentenced to 25 years in prison for a RICO (Racketeer Influenced and Corrupt Organizations Act) conspiracy that involved shooting at rival gang members and conspiracies to distribute heroin and crack-cocaine. Judge Arleo also sentenced him to 10 years of supervised release.

Tony Phillips, a/k/a “Blue,” 28, was convicted at trial of 10 counts in a sixth superseding indictment, including murder in aid of racketeering, attempted murder in aid of racketeering, RICO conspiracy, using firearms during crimes of violence, and conspiracy to distribute one kilogram or more of heroin. The jury returned the verdict on the fourth day of deliberations following a two-month trial before U.S. District Judge Madeline Cox Arleo, who imposed the two life sentences, plus 35 years in prison, today in Newark federal court.

Justin Carnegie, a/k/a “Dew Hi,” a/k/a “Dew,” a/k/a “D,” 31, previously pleaded guilty before Judge Arleo in Newark federal court to five counts in the sixth superseding indictment charging him with RICO conspiracy, conspiracy to commit aggravated assault with a dangerous weapon, conspiracy to possess a firearm, and separate conspiracies to distribute one kilogram of heroin and 280 grams or more of crack-cocaine. Judge Arleo sentenced Carnegie to 25 years in prison.

Phillips and Carnegie were charged in November 2016 in a 22-count indictment charging 14 members and associates with, among other things, seven murders, numerous attempted murders, and numerous other violent and drug trafficking crimes committed as part of the racketeering conspiracy. Thirteen of the 14 defendants charged in the indictment have been convicted and one is awaiting trial.
Another 66 members and associates of the Grape Street Crips who were arrested in a coordinated takedown in May 2015 were separately charged with drug trafficking, physical assaults, and witness intimidation, and all have been convicted.
According to the documents filed in this case and other cases and the evidence presented at trial:

In early 2013, the leader of the New Jersey Grape Street Crips authorized Tony Phillips and other gang members to murder Tariq Johnson because Johnson had grown too close to Almalik Anderson, one of the gang’s chief rivals. Acting on these orders, on May 3, 2013, Phillips and another gang member shot Tariq Johnson multiple times in the head, while the Johnson sat in front of them inside a car. Phillips and his conspirators then dumped Johnson’s body on a deserted street in Newark.

On Oct. 27, 2013, again acting on their gang leader’s orders, Phillips and three other gang members repeatedly shot and nearly killed Almalik Anderson and Saidah Goines, a bystander who was inside Anderson’s car.

In addition to orchestrating these acts of violence, Phillips conspired with other gang members to distribute one kilogram or more of heroin.

Carnegie admitted that on Oct. 7, 2013, he and other gang members sought to avenge the murder of a fellow gang member who had recently been killed by rivals. Carnegie and his fellow gang members travelled to the area of Avon Avenue in Newark, where one of them fired 14 rounds in an attempt to shoot members of the rival gang. After returning to their staging area after the shooting, Carnegie and others fled law enforcement officers, who attempted to arrest them and their fellow gang members.
Carnegie and other gang members frequently used social media to promote the gang’s reputation for violence and drug trafficking. For example, Carnegie has the phrase “187 on all rats” tattooed on his back, a phrase meaning that cooperating witnesses ought to be murdered (“187” is the California penal code section that defines the crime of murder). Carnegie also has bragged in a rap song, “Fuck the Feds, they ain’t stoppin’ me.”

Carnegie frequently carried and stockpiled firearms in furtherance of the gang’s activities. In May 2010, Carnegie stored a loaded Romarm SA Cugir 7.62x39 assault rifle and an American Industries Calico M100 .22LR carbine, along with ammunition for both weapons, in Orange, New Jersey.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, and special agents of the DEA, under the direction of Special Agent in Charge Valerie A. Nickerson with the investigation. He also thanked the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Theodore N. Stephens II, police officers and detectives of the Newark Police Department, under the direction of Public Safety Director Anthony F. Ambrose, and the Essex County Sherriff’s Office, under the direction of Armando B. Fontoura, for their work on the case

The government is represented by Osmar J. Benvenuto, Chief of the Organized Crime and Gangs Unit, and Assistant U.S. Attorney Richard J. Ramsay of the Appeals Division in Newark.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies. 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.

Defense counsel:

Phillips: Gary Cutler Esq., New York
Carnegie: Isaac Wright Jr. Esq., Newark

NEWARK, N.J. – A New York man was indicted today for allegedly conspiring to import and distribute multi-kilogram quantities of cocaine from the Dominican Republic into the United States, U.S. Attorney Craig Carpenito announced. 

Alberto Nicolas Montero, 48, of New York City, is charged with one count of conspiracy to import into the United States five kilograms or more of cocaine and one count of conspiracy to distribute five kilograms or more of cocaine. He has been in custody since his arrest in August 2018.

According to documents filed in this case:

From November 2017 through August 2018, Montero participated in a drug trafficking organization that was operating in New York, New Jersey, and the Dominican Republic by brokering cocaine transactions on behalf of a conspirator in the Dominican Republic (Co-Conspirator 1). In November 2017, an individual (Individual 1) spoke with Montero about a cocaine transaction with Co-Conspirator 1. Individual 1 traveled to the Dominican Republic.  Montero put Individual 1 in contact with Co-Conspirator 1 to facilitate a cocaine transaction. Individual 1 met with Co-Conspirator 1, who expressed interest in setting up a transaction to distribute cocaine to the Newark area. Co-Conspirator 1 distributed to Individual 1 two kilograms of a substance that tested positive for the presence of cocaine.

From December 2017 through Aug. 2, 2018, Individual 1 continued to communicate with Montero regarding future illegal drug transactions. In July 2018, Montero discussed with Individual 1 a purchase of 15 kilograms – later reduced to 14 kilograms – of cocaine from Montero’s contacts in the Dominican Republic. On Aug. 2, 2018, Montero traveled to New Jersey, where a black backpack containing approximately $130,000 was placed in front of Montero as intended payment for the cocaine. Montero discussed with Individual 1 how the money would be transferred to the Dominican Republic so that Co-Conspirator 1 would release the 14 kilograms of cocaine to Individual 1’s associate in the Dominican Republic. Montero was arrested during the course of his discussions with Individual 1 about the logistics of the cocaine transaction.      

Both charges in the indictment carry a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine.  

U.S. Attorney Carpenito credited special agents and task force officers of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, the FBI’s Legal Attaché Office in Santo Domingo, Dominican Republic, the U.S. Drug Enforcement Administration’s New York Division, under the direction of Acting Special Agent in Charge Keith Kruskall, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) New York Division, under the direction of Special Agent in Charge Angel M. Melendez, and the New York Police Department with the investigation.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state and local law enforcement agencies dedicated to identifying and dismantling the most serious drug trafficking, weapons trafficking and money laundering organizations.

The government is represented by Assistant U.S. Attorney Jamie L. Hoxie of the OCDETF/Narcotics Unit of the U.S. Attorney’s Office in Newark.

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

NEWARK, N.J. – A Pompton Plains, New Jersey, man was charged today with maliciously calling in a bomb threat to a religious institution, U.S. Attorney Craig Carpenito announced.

James Triano, 36, is charged by federal criminal indictment with one count of maliciously conveying false information about an explosive. The defendant is scheduled to appear later today before U.S. Magistrate Judge James B. Clark III in Newark federal court.

According to documents filed in this case:

On March 21, 2017, Triano allegedly called a religious institution in Livingston, New Jersey, and maliciously conveyed false information concerning an attempt being made to kill, injure, and intimidate individuals inside, and to damage and destroy the religious institution, by means of an explosive.

The count with which Triano has been charged is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited special agents of the FBI’s Newark Office, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark and officers from the Livingston Police Department, under the direction of Police Chief Gary Marshuetz, with the investigation leading to today’s charges.

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

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

NEWARK, N.J. – A New York man today admitted assaulting and kidnapping an individual with whom he had a romantic relationship, U.S. Attorney Craig Carpenito announced.

Rudolf Szoradi, 50, pleaded guilty before U.S. District Judge Jose J. Linares in Newark federal court to an information charging him with one count of kidnapping and interstate domestic violence.

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

Szoradi and the victim previously had a romantic relationship. On Dec. 15, 2017, Szoradi assaulted the victim with a knife in the basement of a Newark residence. The victim suffered serious injuries. Szoradi then confined her in a vehicle against her will and drove her across state lines, eventually reaching North Carolina, where the victim was able to receive medical attention for her injuries.

According to the terms of the plea agreement, if accepted by the court, Szoradi will receive a sentence of between 87 to 108 months in prison, followed by five years of supervised release. Sentencing is scheduled for April 2, 2019.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea. He also thanked the Newark Police Division and Clayton, North Carolina, police department for their assistance.

The government is represented by Assistant U.S. Attorney Matt Feldman Nikic of the U.S. Attorney’s Office’s Criminal Division in Newark.

Defense counsel: Candace Hom Esq., Assistant Federal Public Defender, Newark

CAMDEN, N.J. – A Cherry Hill, New Jersey, man was sentenced today to 40 months in prison his role in conspiring to sell at least 100 handguns without a federal firearms license, U.S. Attorney Craig Carpenito announced.

Fr’Neil Hickson, a/k/a “Philly,” 38, previously pleaded guilty before U.S. District Judge Robert B. Kugler to Count Two of an indictment charging him with conspiracy to deal in firearms without a federal firearms license. Judge Kugler imposed the sentence today in Camden federal court. Hickson has been in federal custody since his arrest in Atlanta, Georgia, on April 29, 2014. In a separate case in Atlanta, investigated jointly by ATF agents from the Atlanta office and the District of New Jersey, Hickson was arrested for illegal possession of 12 firearms. He pleaded guilty in Atlanta federal court to possession of firearms by a convicted felon and on Oct. 25, 2016, he was sentenced to four years in prison by U.S. District Judge Steve C. Jones. Hickson completed his sentence in that case in August 2017, but remained in federal custody on the indictment that resulted in today’s guilty plea.

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

Hickson admitted that between December 2009 and April 2013 he sold or brokered the sale of at least 100 handguns obtained from sources outside of New Jersey. The investigation showed that Hickson obtained many of the weapons from Joshua Jackson, a/k/a “Apple,” a/k/a “Trent,” and that Jackson obtained most of the firearms through purchases at gun shows from unlicensed gun sellers without background checks. Some of the firearms were also purchased at Ohio gun stores by straw purchasers working for Jackson, who transported the handguns to New Jersey and resold them to Hickson and Terrance Laboo, a Camden drug dealer. Hickson admitted some of the weapons were equipped with extended magazines capable of holding more than 15 rounds of ammunition.

Hickson also sold handguns directly to Terrance Laboo. At the time of the gun sales, Laboo was engaged with others in drug trafficking, including the sale of PCP and cocaine at the corner of 4th and Chestnut streets in Camden. Hickson and Laboo sold, directed or brokered the sale of many of the firearms to other drug dealers and felons in Camden and surrounding areas.

In addition to the prison term, Judge Kugler sentenced Hickson to three years of supervised release.

This case was part of a long-term investigation of illegal gun trafficking referred to as “Operation Buckeye,” as the bulk of the illegal guns recovered from felons in the Camden, Philadelphia and surrounding areas were originally purchased in Ohio.

On July 21, 2016, Laboo, who had previously pleaded guilty to dealing in firearms without a license, conspiracy to deal in firearms without a license, possession of firearms by a convicted felon, and distribution of a controlled substance, was sentenced by Judge Kugler to six years in prison. On Oct. 25, 2016, Jackson, of Willingboro, New Jersey, who had previously entered a guilty plea to dealing in firearms without a license, conspiracy to deal in firearms without a license, and possession of firearms by a convicted felon, was sentenced to six years in prison.

The ATF investigation showed that the conspiracy involved the illegal acquisition, interstate transfer, and illegal sale of approximately 300 handguns to drug dealers and others.

U.S. Attorney Carpenito credited special agents of the ATF Newark Field Division, under the direction of Special Agent in Charge John B. Devito; the N.J. State Police, under the direction of Col. Patrick J. Callahan; the Camden County Prosecutor’s Office, under the direction of Mary Eva Colalillo; and the Burlington County Prosecutor’s Office, under the direction of Scott A. Coffina, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Patrick C. Askin and Alyson Oswald of the U.S. Attorney’s Office in Camden.

Defense counsel: Michael Huff Esq., Philadelphia