District of New Jersey

NEWARK, N.J. – Two individuals who operate a Newark grocery store were charged today with fraudulently exchanging over $885,000 in Supplemental Nutrition Assistance Program (SNAP) benefits for cash, U.S. Attorney Craig Carpenito announced.

Maria Teresa Venegas, 25, and her father, Manuel Venegas, 53, both of Newark, are charged by complaint with SNAP benefits fraud. Both were arrested this morning and appeared in the afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court. They were released on $200,000 unsecured bond.

According to the complaint:

Since November 2011, the defendants managed Jenny’s Deli, a small grocery store in Newark that was authorized to accept SNAP benefits, formerly known as the Food Stamp Program. The program is administered by the U.S. Department of Agriculture. Retail food stores approved for participation in SNAP may sell food in exchange for SNAP benefits but may not exchange SNAP benefits for cash. 

Manuel and Maria Teresa Venegas allegedly exchanged more than $885,000 in SNAP benefits for cash between 2011 and 2018. In addition to the high volume of SNAP redemptions for Jenny’s Deli indicating fraud, law enforcement officers used an undercover agent who engaged in approximately 20 “purchases” at Jenny’s Deli where one or both defendants allegedly exchanged cash for SNAP benefits.

The SNAP benefits fraud charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.

U.S. Attorney Carpenito credited special agents of the U.S. Department of Agriculture – Office of Inspector General, under the direction of Special Agent in Charge Bethanne M. Dinkins, with the investigation leading to today’s charges.

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

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

Defense counsel: Maria Teresa Venegas: Linda Foster, Esq., Assistant Federal Public Defender, Newark
Manuel Venegas: Laurie Fierro Esq., Kinnelon, New Jersey

Beam Bros. Trucking Inc. (BBT), and its principals Gerald Beam and Garland Beam, have agreed to pay $1,025,000 to resolve allegations under the False Claims Act that BBT overcharged the U.S. Postal Service (USPS) on contracts to transport mail.  BBT is a trucking company located in Mt. Crawford, Virginia.

 

“The Department of Justice takes seriously its role in protecting the federal procurement process from false claims,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “This settlement demonstrates that we will hold accountable federal contractors engaging in fraud, and will ensure that federal funds are protected from overcharges and abuse.”

 

“We are gratified to have contributed to this investigation and applaud the exceptional work by the investigative team for both protecting the contracting process and overall program costs,” said Special Agent in Charge Scott Pierce of the U.S. Postal Service Office of Inspector General.  “Along with our law enforcement partners, the USPS OIG will continue to aggressively investigate those who engage in activities designed to defraud the Postal Service.” 

 

“Contractors working for the federal government are held to the same high ethical standards as full-time employees,” U.S. Attorney for the District of New Jersey Craig Carpenito said. “This settlement will return more than $1 million to the USPS.”

 

USPS contracts with trucking companies, including BBT, to transport mail throughout the United States.  On some contracts, USPS had provided trucking contractors with credit cards, known as Voyager Cards, to pay for fuel.  This settlement resolves allegations that BBT misused Voyager Cards to purchase fuel on contracts that did not allow for their use, resulting in inflated charges in violation of the False Claims Act.     

 

The settlement resolves allegations made in lawsuit filed under the whistleblower provision of the False Claims Act by Bobby Blizzard, a former BBT employee.  The False Claims Act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  Mr. Blizzard’s share of the recovery has yet to be determined. 

 

The settlement was the result of a coordinated effort between the United States Attorney’s Office for the District of New Jersey, the Civil Division of the Department of Justice, and the USPS, Office of the Inspector General.

 

The lawsuit, which was filed in the District of New Jersey, is captioned United States ex rel. Doe v. Beam Bros. Trucking, Inc., Civil Action No. 10-657 (D.N.J.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability. 

NEWARK, N.J. – Beam Bros. Trucking Inc. (BBT), and its principals Gerald Beam and Garland Beam, have agreed to pay $1,025,000 to resolve allegations under the False Claims Act that BBT overcharged the U.S. Postal Service (USPS) on contracts to transport mail. BBT is a trucking company located in Mt. Crawford, Virginia.

“Contractors working for the federal government are held to the same high ethical standards as full-time employees,” U.S. Attorney for the District of New Jersey Craig Carpenito said. “This settlement will return more than $1 million to the USPS.”

“The Department of Justice takes seriously its role in protecting the federal procurement process from false claims,” Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division said. “This settlement demonstrates that we will hold accountable federal contractors engaging in fraud, and will ensure that federal funds are protected from overcharges and abuse.”

“We are gratified to have contributed to this investigation and applaud the exceptional work by the investigative team for both protecting the contracting process and overall program costs,” Special Agent in Charge Scott Pierce of the U.S. Postal Service Office of Inspector General, said. “Along with our law enforcement partners, the USPS OIG will continue to aggressively investigate those who engage in activities designed to defraud the Postal Service.”

USPS contracts with trucking companies, including BBT, to transport mail throughout the United States. On some contracts, USPS had provided trucking contractors with credit cards, known as Voyager Cards, to pay for fuel. This settlement resolves allegations that BBT misused Voyager Cards to purchase fuel on contracts that did not allow for their use, resulting in inflated charges in violation of the False Claims Act.

The settlement resolves allegations made in lawsuit filed under the whistleblower provision of the False Claims Act by Bobby Blizzard, a former BBT employee. The False Claims Act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. Mr. Blizzard’s share of the recovery has yet to be determined.

The settlement was the result of a coordinated effort between the United States Attorney’s Office for the District of New Jersey, the Civil Division of the Department of Justice, and the USPS, Office of the Inspector General. The government is represented by Assistant U.S. Attorney Frances Bajada, District of New Jersey, and Trial Attorney Gregory Pearson, Commercial Litigation Branch, Civil Division, U.S. Department of Justice.

The lawsuit, which was filed in the District of New Jersey, is captioned United States ex rel. Doe v. Beam Bros. Trucking, Inc., Civil Action No. 10-657 (D.N.J.). The claims resolved by this settlement are allegations only, and there has been no determination of liability.

 

CAMDEN, N.J. – A Essex County, New Jersey, man today admitted being a felon in possession of a weapon – for the second time – as well as a violation of supervised release from his first felon in possession conviction, and agreed to a 144-month sentence, U.S. Attorney Craig Carpenito announced.

John Cottle, 47, pleaded guilty to an information charging him with one count of being a felon in possession of a firearm and one count of violation of supervised release from his first felon in possession of a firearm conviction from 2010. Cottle entered his plea before U.S. District Judge Noel L. Hillman in Camden federal court.

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

In December 2016, investigators from the Newark and Hillside police departments responded to reports of a robbery in the area of South 13th Street, near Avon Avenue, in Newark.  Officers encountered Cottle in the area and upon investigation found him to be in possession of a loaded .40 caliber Glock semi-automatic handgun. Cottle has numerous prior felony convictions, including a 2010 felon in possession of a firearm conviction in the District of New Jersey – from which he was still on supervised release at the time of the 2016 arrest – and is prohibited from possessing a firearm under federal law.  

The felon in possession of a firearm charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine; the violation of supervised release carries a maximum potential penalty of 24 months in prison. As part of his plea agreement, Cottle agreed to the maximum penalty for each of the crimes charged.  
  
U.S. Attorney Carpenito credited FBI special agents, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to the guilty plea. He also thanked the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Robert D. Laurino; the Newark Police Department, under the direction of Public Safety Director Anthony F. Ambrose; the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Michael A. Monahan; and the Hillside Police Department, under the direction of Chief of Police Vincent Ricciardi, for their assistance.

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

TRENTON, N.J. -The owner and operator of a stock trading operation today admitted participating in a multi-year insider trading scheme that made over $3 million in illicit profits by exploiting material information in violation of confidentiality agreements, U.S. Attorney Craig Carpenito announced.

Steven Fishoff, 60, of Westlake Village, California, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to Count Four of an indictment charging him with securities fraud.

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

On numerous occasions between May 2010 and August 2013, Fishoff, Ronald Chernin, 69, of Oak Park, California, Steven Costantin, 57, of Farmingdale, New Jersey, Paul Petrello, 56, of Boca Raton, Florida, and Joseph Spera, 56, of Boca Raton, short-sold the securities of numerous public companies using inside information obtained by Fishoff and others.

For each of these offerings, Fishoff or one or more of the day traders that he employed – including his friend, Chernin, and his brother-in-law, Costantin – entered into confidentiality or “wall-crossing” agreements as representatives of Fishoff’s trading entities, whereby they agreed not to disclose or trade on inside information concerning the offerings, such as the name of the issuers and the timing and pricing of the transactions, and were “brought over the wall” for the narrow purpose of determining whether to purchase the offered securities.

In breach of these confidentiality and trading restrictions, Fishoff tipped Petrello and Spera – identified as “CC-1” in the indictment – with the inside information about the confidentially marketed offerings, including the stock trading symbols of the companies and the timing or pricing of the upcoming offerings.

In furtherance of the scheme, Fishoff short sold the stock of the public companies, including Synergy Pharmaceuticals Inc., based on the inside information, in anticipation of a drop in the stocks’ price when the stock offerings were disclosed to the public. Fishoff and his co-defendants traded through the accounts of their respective trading entities or through related accounts that they controlled.

Fishoff and his co-defendants used the inside information to gain more than $3 million in illegal profits over the course of the three-year scheme. Chernin and Costantin, who executed trades using Fishoff’s capital, along with Petrello and Spera, generally split their profits with Fishoff on a 50-50 basis as compensation for the inside information.

Fishoff faces a maximum potential penalty of 20 years in prison and a $5 million fine on the securities fraud charge. Fishoff also agreed to settle the parallel civil forfeiture action, United States of America v. The Contents of Wedbush Securities Account Number 8313 et al., and to forfeit the over $1.6 million in assets sought by the government in that complaint. His sentencing is scheduled for June 20, 2018.

Chernin, Costantin, Petrello, and Spera have all pleaded guilty for their involvement in the scheme and await sentencing.

U.S. Attorney Craig Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s guilty plea. 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 Senior Associate Regional Director Sanjay Wadhwa, for its assistance.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu, Chief of the Asset Recovery and Money Laundering Unit, Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit, and Assistant U.S. Attorney Sarah Devlin of the Asset Recovery and Money Laundering Unit.

Defense counsel: Daniel Brown Esq. and Lionel André Esq.

TRENTON, N.J. – An Elizabeth, New Jersey, man was sentenced today to 97 months in prison for using his home computer to distribute sexually explicit videos and images of children, U.S. Attorney Craig Carpenito announced.

Thomas J. Leonard, 36, previously pleaded guilty before U.S. District Judge Brian R. Martinotti to an information charging him with one count of distributing child pornography. Judge Martinotti imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court, Leonard admitted that he used the online peer-to-peer file sharing program BitTorrent to obtain and distribute images and videos of children engaged in sexual acts.

In addition to the prison term, Judge Martinotti sentenced Leonard to five years of supervised release and fined him $30,000.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation. He also thanked the Union County Prosecutor’s Office, the N.J. State Police, and the N.J. Regional Computer Forensics Laboratory, for their assistance.

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

Anyone with information regarding possible victims of this activity is urged to contact the FBI in Newark at 973-792-3000.

Defense counsel: Rubin M. Sinins Esq., Springfield, New Jersey

NEWARK, N.J. – Federal and local law enforcement authorities arrested six people today for their alleged roles in a drug trafficking organization that distributed heroin in Newark, U.S. Attorney Craig Carpenito announced.

Tyrone Brown, 34, Lamarr Burwell, 22, and Miles McCloud, 37, all of Newark, and Martin Pettiford, 23, of Irvington, New Jersey, are each charged by complaint with one count of conspiracy to distribute heroin and one or more counts of possession with intent to distribute heroin. Tyrone Brown is also charged with one count of possession with intent to distribute a fentanyl analogue. Omar Wyche, 29, of Newark, and Keyeen Scott, 37, of Myrtle Beach, South Carolina, were each charged with one or more counts of possession with intent to distribute heroin.

Five of the defendants are scheduled to appear before U.S. Magistrate Judge Mark Falk in Newark federal court today; Keyeen Scott is scheduled to appear before U.S. Magistrate Judge Kaymani D. West in Florence, South Carolina.

“The activities described in the criminal complaints unsealed today describe an active marketplace where heroin and crack cocaine are sold openly on the streets of Newark and surrounding areas,” U.S. Attorney Carpenito said. “The wiretaps and surveillance provide a glimpse into the violent and dangerous world these defendants have created in one neighborhood. Our office, working together with our federal and local law enforcement partners, is focusing on ridding neighborhoods of just this type of activity, one gang at a time. Today’s arrests signal an important new beginning in our fight to retake our streets from dangerous gangs and drug dealers.”

“Gangs are the mechanism by which drugs are transmitted to the ‘bad seeds’ in our cities, and are at the root of the violent crime problem,” FBI Special Agent in Charge Timothy Gallagher said. “The FBI Newark Field Office is committed to making Newark, and its surrounding communities, a safe place to be. The most effective way to combat this epidemic of violence is through cooperation; the efforts of all law enforcement agencies with the support and understanding of the citizens whom we protect and serve.”

“We appreciate our partnership with U.S. Attorney Craig Carpentino and Special Agent in Charge, Timothy Gallagher of the F.B.I. in Newark for lending their invaluable law enforcement expertise and resources in the apprehension of these suspects,” Newark Department of Public Safety Director Anthony Ambrose said.  “These arrests represent our commitment to ensuring that the neighborhood in and around New Community Corporation complex is free from individuals who blatantly commit crimes and jeopardize the safety and quality of life of our residents. We will continue working tirelessly with our federal and local law enforcement partners to keep Newark safe.”

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

The defendants are allegedly members of a drug trafficking organization that dealt heroin in and around Newark, specifically the area of Hayes Street and 14th Avenue near the New Community Corp. community development (NCC). The organization also supplied drugs to customers and other distributors elsewhere.

The organization is composed of members of the Brick City Brims set of the Bloods street gang. The investigation revealed that in addition to selling narcotics in and around NCC – primarily in a courtyard area they refer to as “the desert” – the members of the drug trafficking organization alerted each other to the presence of police, rival gang members or drug dealers within NCC; pooled narcotics; shared narcotics proceeds and customers; and raised bail money for each other following an arrest. Members of the organization have also engaged in violence and been the subject of violence in connection with their narcotics trafficking activities.

An investigation led by the FBI used physical and video surveillance, confidential informants, cooperating witnesses, dozens of controlled narcotics purchases, record checks, narcotics seizures, including of heroin, and multiple telephone wiretaps to uncover the operations of the drug trafficking organization.

The count of drug trafficking conspiracy carries a mandatory minimum penalty of five years in prison, a maximum potential penalty of 40 years in prison, and a $5 million fine. The drug possession counts carry a maximum potential penalty of 20 years in prison and a $1 million fine.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge  Gallagher in Newark, and members of the Newark Department of Public Safety, under the direction of Director Anthony F. Ambrose, with the investigation leading to the charges.

He also thanked the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, the New Jersey Department of Corrections, New Jersey State Parole, the East Orange Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the U.S. Marshals for their assistance.

The drug trafficking organization operating out of the NCC was an original focus of the Violent Crime Initiative (VCI). The VCI was formed in August 2017 by the U.S. Attorney’s Office for the District of New Jersey, the Essex County Prosecutor’s Office, and the City of Newark’s Department of Public Safety for the sole purpose of combatting violent crime in and around the Newark. As part of this partnership, federal, state, county, and city agencies collaborate and pool resources to prosecute violent offenders who endanger the safety of the community. The VCI includes the U.S. Attorney’s Office, the FBI, the ATF, the Drug Enforcement Administration’s (DEA) New Jersey Division, the U.S. Marshals, the Newark Department of Public Safety, the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, New Jersey State Parole Board, Union County Jail, New Jersey State Police Regional Operations and Intelligence Center/Real Time Crime Center, New Jersey Department of Corrections, the East Orange Police Department, and the Irvington Police Department.

The government is represented by Assistant U.S. Attorney Elaine K. Lou of the U.S. Attorney’s Office’s Organized Crime/Gangs Unit Division in Newark.

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

NEWARK, N.J. – A Jersey City, New Jersey, woman was charged today with possessing a weapon as a previously convicted felon, U.S. Attorney Craig Carpenito announced.

Shahouna Dutton, 24, is charged by complaint with one count of being a felon in possession of a firearm. Dutton was arrested at her home by special agents of the FBI. She made her initial appearance before U.S. Magistrate Judge Mark Falk in Newark federal court and was detained.

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

On Feb. 22, 2018, investigators from the Hudson County Prosecutor’s Office executed a search warrant at Dutton’s home to look for further evidence of Dutton’s witness tampering related to a homicide case pending in Hudson County, which was scheduled to begin on Feb. 27, 2018. Investigators found a loaded .22 caliber handgun in Dutton’s bedroom. Dutton has two prior felony convictions in the State of New Jersey and is prohibited from possessing a firearm under federal law.  

The felon in possession of a firearm charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited FBI special agents, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to the arrest. He also thanked the Hudson County Prosecutor’s Office, under the direction of Prosecutor Esther Suarez, and the Jersey City Police Department, under the direction of Department of Public Safety Director James Shea, for their assistance.

The government is represented by Senior Litigation Counsel Robert Frazer of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

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

NEWARK, N.J. – A Jersey City, New Jersey, man was charged today with conspiracy to distribute cocaine after law enforcement conducted a wiretap of his phone and found 2.5 kilograms of cocaine in his apartment, U.S. Attorney Craig Carpenito announced.

Rayfeal Roman, 34, is charged by complaint with one count of conspiracy to distribute 500 grams or more of cocaine. He was arrested on state charges last month and remains in custody; he will have his initial appearance on the federal charges later this week before U.S. Magistrate Judge Mark Falk in Newark federal court. 

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

Since September 2017, law enforcement officers in New Jersey have been investigating a large drug distribution network involving Roman and others. The investigation included lawfully intercepted communications, as well as physical surveillance, a comprehensive review of records, and other investigative methods.

Law enforcement officers obtained a court order to intercept wire and electronic communications occurring over the cellular telephone used by Roman. Law enforcement officers intercepted numerous telephone conversations in which Roman others discussed the distribution of cocaine.

On Feb. 6-7, 2018, law enforcement officers intercepted communications between Roman and a conspirator regarding the sale of one kilogram of cocaine. The conspirator wanted to obtain the cocaine from Roman for $29,500, and that the conspirator would, in turn, be providing the cocaine to another unnamed individual. Roman directed the conspirator to go to Roman’s apartment in Jersey City in order to obtain the cocaine.

Law enforcement officers obtained and executed a search warrant for Roman’s apartment in Jersey City. They found approximately 2.5 kilograms of cocaine, approximately $30,000 in cash, and various other materials commonly used in connection with drug distribution, such as an electronic money-counting machine, a digital scale, and drug-packaging materials.

The cocaine distribution conspiracy charge carries a mandatory minimum penalty of five years in prison, a maximum of 40 years in prison, and a $2 million fine. 

U.S. Attorney Carpenito credited the Hudson County Prosecutor’s Office under the leadership of Prosecutor Esther Suarez, and special agents of the Drug Enforcement Administration, under the direction of Valerie A. Nickerson, with the investigation leading to the charge.

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

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 Norcross, Georgia, man was sentenced today to 84 months in prison for his role in an international drug trafficking organization, U.S. Attorney Craig Carpenito announced.

Wilson Madrid, 32, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with conspiracy to launder money. Judge Sheridan imposed the sentence today in Trenton federal court.

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

From June 2014 through November 2014, Madrid conspired with other members of an international drug trafficking organization, with cells operating in New Jersey, to launder more than $150,000 related to the distribution of heroin. In December 2014, a co-defendant, Dany Francisco-Valerio, 44, of Bronx, New York, conspired with members of the drug trafficking organization to transport and distribute kilogram quantities of heroin; on Dec. 24, 2014, he was arrested while transporting 15 kilograms of heroin contained in a hidden compartment in his vehicle. Francisco-Valerio pleaded guilty before Judge Sheridan to an information charging him with conspiracy to distribute heroin and has been sentenced to 51 months in prison.

One of their conspirators, Henry Zamora, pleaded guilty before Judge Sheridan on Aug. 31, 2017, to conspiring to distribute four kilograms of heroin that were recovered from a hidden compartment in Zamora’s vehicle. Another conspirator, Harry Madrid, pleaded guilty before Judge Sheridan on Sept. 7, 2017, to conspiring to launder more than $150,000 on behalf of the drug trafficking organization.

In addition to the prison term, Judge Sheridan sentenced Madrid to five years of supervised release.

U.S. Attorney Carpenito credited the Drug Enforcement Administration’s (DEA) New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson, officers of the N.J. State Police, under the direction of Superintendent Col. Patrick Callahan, and officers from the DeKalb (Illinois) Police Department, under the direction of Chief Gene Lowrey, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Thomas S. Kearney and Assistant U.S. Attorney Jamari Buxton of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.

Defense counsel: Mark Davis Esq., Hamilton, New Jersey

NEWARK, N.J. – A former Newark police officer was indicted by a federal grand jury today for allegedly conspiring to defraud the Newark Watershed Conservation and Development Corporation (NWCDC) and giving kickbacks to its former executive director, U.S. Attorney Craig Carpenito announced.

Janell Robinson, 42, of Newark, is charged with one count of conspiracy to defraud the NWCDC facilitated by use of mails and wire transmissions, two counts of mail fraud, and one count of conspiracy to commit extortion under color of official right affecting interstate commerce. 

According to documents filed in this case:

Between March 2010 and May 2013, while Robinson was a Newark police officer, she controlled Protected and Secured Services LLC (P&S), a company that purported to provide security-consulting services to its only client, the NWCDC. 

Between March 2010 and May 2013, Robinson allegedly conspired with Brashear to pay Brashear a stream of concealed and undisclosed kickbacks from the proceeds that P&S received from the NWCDC. In exchange for Brashear’s assistance with securing P&S a contract with the NWCDC and approving fraudulent and inflated invoices that Robinson submitted, Robinson paid Brashear approximately $3,000 each time P&S received payment from the NWCDC. 

In total, the NWCDC paid P&S approximately $289,000 during the scheme, some of which Robinson used to pay Brashear as kickbacks.    

The wire and mail fraud conspiracy, mail fraud, and conspiracy to commit extortion under color of official right charges each carry a maximum potential penalty of 20 years in prison and a $250,000 fine. The indictment also seeks forfeiture of the approximately $289,000 in ill-gotten gains obtained from the scheme.  

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation.

The government is represented by Assistant U.S. Attorneys Leslie F. Schwartz and Jacques S. Pierre of the U.S. Attorney’s Office Special Prosecutions Division. 

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

Defense counsel: Cynthia H. Hardaway Esq.
 

NEWARK, N.J. – A Kenvil, New Jersey, man today admitted 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, 64, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to an information charging him with conspiring to commit extortion using threats of force, violence, and fear. 

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.

The count of conspiracy to commit extortion carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 12, 2018.

U.S. Attorney Carpenito credited special agents with the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation.

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.

Donnerstag remains charged by indictment. The charge and allegations against him are merely accusations, and he is presumed innocent unless and until proven guilty. 

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

NEWARK, N.J. – A Staten Island, New York, man today admitted his role in a scheme to use phony prescriptions for medically unnecessary compounded medications to defraud the Metropolitan Transportation Authority (MTA)’s health insurance plan and other insurers out of $5 million, U.S. Attorney Craig Carpenito announced.

Christopher Frusci, 33, an MTA bus driver, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark 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:

Frusci admitted that from May 2015 through May 2017, he conspired to defraud health insurance plans, including the MTA’s privately-funded health plan, using fraudulent claims for compounded medications, such as scar creams, pain creams, and metabolic supplements marketed by a company referred to as “Company A” in the information. 

In order to secure prescriptions for the compounded medications, Company A and its “sales representatives,” referred beneficiaries to telemedicine physicians who were paid by Company A or its affiliates.

Company A recruited Frusci as a sales representative and instructed him to target individuals with certain health plans, including the MTA’s health plan, that covered compounded medications. Frusci then convinced multiple MTA employees to obtain medically unnecessary medications by paying them monthly cash bribes of approximately $100 to $1,500. In order to increase his profits, Frusci also recruited other individuals to work as sales representatives under him. 

As part of his plea agreement, Frusci must forfeit $724,448.73 in criminal proceeds he received for his role in the scheme and pay restitution of at least $5 million. He faces a statutory maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 4, 2018.

“In an era when many Americans worry about securing health insurance for their families, we’ve seen far too many instances where both private and publicly-funded insurance providers are being raided for millions in phony reimbursements on compounded medications,” U.S. Attorney Carpenito said. “Frusci admitted that he and others sought to defraud the MTA health plan and other insurers by recruiting the very people who enjoy that coverage, offering them cash bribes to get medications they didn’t need. His conviction should serve as a warning to those who would exploit their health coverage for financial gain.”

FBI Special Agent in Charge Timothy Gallagher said, "Christopher Frusci treated his own employer's health insurance plan of Metropolitan Transportation Authority as a vehicle to line his own pockets when he engaged in an elaborate scheme that resulted in defrauding insurers out of $5 million. The FBI, in conjunction with our law enforcement partners will continue to investigate and bring to justice criminals who defraud the system and cheat the American taxpayer."

“Our investigation is ongoing to determine the extent to which additional MTA employees may have participated in this fraudulent scheme,” said Inspector General Barry Kluger of the MTA Office of the Inspector General. “I applaud and am pleased to support the efforts of the U.S. Attorney, along with the FBI and the Department of Defense Office of Inspector General, to combat this nationwide epidemic of health care fraud that unfortunately, and at great cost, has infected the MTA as well.”

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; the MTA Office of the Inspector General, under the direction of Inspector General Barry Kluger; and the U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey, with the ongoing investigation.

The government is represented by Assistant U.S. Attorney Erica Liu, Chief of the U.S. Attorney's Office Opioid Abuse Prevention and Enforcement Unit in Newark.

To date, the New Jersey U.S. Attorney’s Office has prosecuted over 20 individuals involved in various compounding pharmacy schemes across New Jersey to defraud health care benefit programs, and has recovered more than $4 million through forfeiture and restitution. These schemes have caused a total loss of more than $70 million to the health care industry, which has affected state, federal and private health care benefit programs. 

The New Jersey U.S. Attorney’s Office reorganized its health care practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.38 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Defense counsel: Patrick V. Parrotta, Staten Island, New York

NEWARK, N.J. – A South Orange, New Jersey, man was sentenced today to 135 months in prison for his participation in the September 2015 armed robbery of a club in Passaic, New Jersey, U.S. Attorney Craig Carpenito announced.

Keontrae Lawrence, a/k/a “Taz,” 29, previously pleaded guilty before U.S. District Judge Madeline Cox Arleo to an indictment charging him with one count of conspiracy to commit Hobbs Act robbery and one count of brandishing a firearm during a crime of violence. Judge Arleo imposed the sentence today in Newark federal court.

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

On Sept. 6, 2015, Lawrence and others agreed to rob a club in Passaic at gunpoint.  During his plea hearing, Lawrence admitted that he knowingly and willfully participated in the robbery and that he and another conspirator brandished a firearm and threatened to use violence against a club employee. He also admitted that he and the other conspirator took $26,084 in cash from the club before fleeing in a getaway car.

In addition to the prison term, Judge Arleo sentenced Lawrence to five years of supervised release.

Lawrence was originally charged with Jimmy Cooper, a/k/a “Flip,” 32, of Irvington, New Jersey, and Shaheed Blamahsah, a/k/a “Aboo,” 30, of East Orange, New Jersey, in November 2016. Cooper and Lawrence were later indicted by a federal grand jury on March 24, 2017, for their roles in the robbery.

Blamahsah pleaded guilty to his role in the robbery and was sentenced Oct. 6, 2017, to 150 months in prison. The charges against Cooper are still pending, and he is presumed innocent unless and until proven guilty.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and members of the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes, with the investigation leading to today’s sentencing. He also thanked the Passaic County Sheriff’s Office, the Passaic Police Department, and the Newark Police Division for their assistance.

The government is represented by Assistant U.S. Attorney Elaine K. Lou of the U.S. Attorney’s Office’s Criminal Division in Newark.

Defense counsel: John A. Azzarello Esq., Morristown, New Jersey

NEWARK, N.J.  – A Salem County, New Jersey, woman today admitted signing false tax returns for shell companies resulting in $286,742 in fraudulent refunds, U.S. Attorney Craig Carpenito announced.

Marilyn Crespo, 50, of Carney’s Point, New Jersey, pleaded guilty before U.S. Chief District Judge Jose L. Linares in Newark federal court to an information charging her one count of filing a false corporate tax return for tax year 2009.

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

Crespo previously resided in Guttenberg, New Jersey. At the direction of her husband, Jose Crespo, she signed under penalty of perjury numerous false corporate tax returns, Forms 1120, for fake businesses, knowing that the businesses were not real and that the credits claimed on the tax returns were false.

In signing these false tax returns, Marilyn Crespo took advantage of fuel excise tax credits offered under federal tax law. The federal government taxes gasoline, diesel fuel, and certain other types of fuel, but certain commercial uses of these fuels are nontaxable. Businesses that purchase fuel for a nontaxable use can claim a tax credit by filing Form 4136 entitled “Credit for Federal Tax Paid on Fuels.”

Marilyn Crespo signed a federal corporate tax return for 2009 for Magnum Cleaning Service Corp. that claimed gross receipts of $115,027, a fuel excise tax credit of $20,859 and a resulting refund of $15,750. In fact, Magnum was a shell company and the gross receipts and fuel excise tax credit numbers were false. Marilyn Crespo received and cashed the $15,750 refund check at a check-cashing facility in Guttenberg. She cashed many other refund checks for similar false tax returns at this same check-cashing facility.

Jose Crespo pleaded guilty on Sept. 11, 2017, before Judge Linares, to engaging in the fuel excise tax credit scheme and another tax fraud scheme and causing an anticipated loss to the IRS of nearly $1.5 million. He was sentenced Dec. 20, 2017, to three years in prison.

The count of filing a false tax return carries a maximum potential penalty of three years in prison, and a potential $250,000 fine or twice the gross gain or loss from the offense. Sentencing is set for June 20, 2018.

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

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

Defense counsel: Kenneth W. Kayser Esq., East Hanover, New Jersey

CAMDEN, N.J. – A Northfield, New Jersey, man today admitted defrauding New Jersey state health benefits programs and other insurers out of millions of dollars by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney Gurbir S. Grewal announced.

Michael Sher, 40, 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.

“Michael Sher paid kickbacks to patients, gave an envelope of cash to a medical doctor who caused thousands of fraudulent compounded medication prescriptions to be filled, and actively recruited others below him as part of the conspiracy to defraud New Jersey state health benefits programs,” U.S. Attorney Carpenito said. “It is unconscionable for a public servant to defraud the very public he swore to protect, yet that is exactly what Michael Sher did. The defendants convicted in this case include two firefighters, a guidance counselor, a teacher, a medical doctor, and several pharmaceutical employees, which speaks to the extensive network employed by this conspiracy and the efforts of federal and state law enforcement partners to bring this wasteful and brazen scheme to an end.”

“Firemen take an oath to uphold the law. The FBI works to ensure that they are held accountable when they violate that pledge and break the law,” Special Agent in Charge Timothy Gallagher of the Newark FBI Field Office said. “The guilty plea by Michael Sher sends a clear message that the FBI and our law enforcement partners will relentlessly pursue those who defraud the State Health Benefits Program, which ultimately affects the hardworking citizens of New Jersey.”

“Michael Sher acted as a recruiter in this conspiracy by persuading individuals in New Jersey to obtain medically unnecessary and very expensive compounded medications from an out-of-state pharmacy. Sher’s co-conspirators paid him $1.7 million to engage in this criminal conduct. We will continue to work with our law enforcement partners to aggressively investigate illegal prescription drug schemes, particularly when they impact patients of programs administered by the Department of Labor," said Peter Nozka, Acting Special Agent in Charge, New York Region, U.S. Department of Labor Office of Inspector General.

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

From January 2015 through April 2016, Sher and others recruited individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the information as the “Compounding Pharmacy.”

The conspirators knew that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. They also knew that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular medications.

An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.

Sher and conspirators working under him recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications. Sher and others often used pre-printed prescription forms in which they selected medications with the highest possible reimbursement, without any consideration for medical necessity. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.

The pharmacy paid one of Sher’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Sher and other members of the conspiracy. Sher admitted paying one of the doctors to reward the doctor for signing prescriptions. Sher also paid individuals covered by the Pharmacy Benefits Administrator, as well as the other recruiters who worked under him during the conspiracy.

According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy more than $50 million for compounded medications mailed to individuals in New Jersey, including $7,065,303.00 for prescriptions submitted by Sher and his cohorts. Sher received approximately $1,728,372.29 for his role in the scheme.

Sher faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. As part of his plea agreement, Sher must forfeit his criminal proceeds and pay restitution in an amount to be determined at sentencing. Sentencing is scheduled for June 8, 2018.

Fifteen other conspirators – Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, Michael Pilate, Shawn Sypherd, and Nicholas Tedesco – pleaded guilty from August through February 2018 and await sentencing.

U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Acting Special Agent in Charge Peter Nozka in New York, with the investigation leading to the guilty plea. He also thanked the Pensions and Financial Transactions Section of the Division of Law, within the Attorney General’s Office, under the direction of Attorney General Gurbir Grewal and Division Chief Eileen Schlindwein Den Bleyker, for its assistance in the investigation.

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

Defense counsel: William J. Hughes, Jr., Esquire, Morristown, New Jersey 

NEWARK, N.J. – A Washington, New Jersey, man was convicted today of sex crimes, extortion and stalking – including asking a minor girl to produce explicit images of herself and threatening a second girl if she didn’t agree to meet and date him, U.S. Attorney Craig Carpenito announced.

Brandon McIntyre, 25, was convicted of two counts of the production of child pornography, one count of the online enticement of a minor to engage in criminal sexual conduct, two counts of sending interstate extortionate threats, and one count of stalking. The jury deliberated approximately four hours following a one-week trial before U.S. District Judge Kevin McNulty in Newark federal court.

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

McIntyre met various minor girls through Facebook, sometimes as himself, other times pretending to be a teenage girl. Over the course of the correspondence with one female, McIntyre threatened to hurt her boyfriend and kill her family when she refused to go out with him. In his interaction with another girl, McIntyre sent her images of his genitals and demanded that she send nude images of herself. McIntyre threatened the girl, claiming he was a state trooper who could arrest and imprison her family members if she did not send him nude images of herself. When one victim threatened to report McIntyre to her school guidance counselor, McIntyre responded, “Do it and see what happens” and “I can have ur family killed too and make u watch.”

McIntyre admitted to law enforcement that he, at times, pretended to be a teenage girl using the alias “Katie Thompson” in online chats with minors. He said he solicited minors to take and send nude images of themselves to him and threatened to harm minors and their loved ones on multiple occasions if they did not comply with his demands. 

The charges of sexual exploitation of a child each carry a mandatory minimum penalty of 15 years in prison, and a maximum potential penalty of 30 years in prison. The charge of online enticement carries a mandatory minimum penalty of 10 years in prison, and a maximum potential penalty of life in prison. The charges of interstate extortionate threats each carry a maximum potential penalty of five years in prison. The charge of stalking carries a maximum penalty of five years in prison. All of the counts are also punishable by a $250,000 fine. Sentencing will be scheduled at a later date.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; the Middlebury, Vermont, Police Department, and the Clinton Police Department with the investigation leading to today’s conviction.

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

NEWARK, N.J. – A Bronx, New York, man was sentenced today to 54 months in prison for his role in an extensive scheme to obtain money through fraudulently obtained refund checks issued by the U.S. Treasury, U.S. Attorney Craig Carpenito announced.     

Hector Urena previously pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging him with one count each of conspiracy to steal government funds, theft of government funds, and aggravated identity theft (Count Three). Judge Vazquez imposed the sentence today in Newark federal court

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

Stolen Identity Refund Fraud (SIRF) is a common type of fraud committed against the United States government that involves the use of stolen identities to commit tax refund fraud. SIRF schemes generally share a number of hallmarks. Perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico. They then complete Form 1040 tax returns using the fraudulently obtained information and falsifying wages earned, taxes withheld, and other data, always ensuring that the fraudulent tax return generates a refund. They direct the U.S. Treasury Department to mail refund checks to locations that the perpetrators control or can access. With the fraudulently obtained refund checks in hand, SIRF perpetrators generate cash proceeds by depositing the checks into bank accounts that they control or cashing the checks at check cashing businesses.

The investigation revealed that Urena and others participated in a classic SIRF scheme.  Urena’s conspirators obtained stolen identities to file fraudulent Form 1040s. He and his conspirators then used false and fraudulent documents to convert treasury checks into cash or other proceeds for their own profit at a check cashing business Urena owned. From August 2013 through May 2015, the scheme caused more than $2.7 million in losses to the U.S. Treasury.

In addition to the prison term, Judge Vazquez sentenced Urena to three years of supervised release and ordered him to pay $2.78 million in restitution.       

U.S. Attorney Carpenito credited special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Joseph W. Cronin; special agents of the U.S. Postal Service Office of Inspector General, under the direction of Special Agent in Charge Monica Weyler; and special agents of the U.S. Secret Service, under the direction of Special Agent in Charge Mark McKevitt; with the investigation leading to today’s sentencing. 

The government is represented by Assistant U.S. Attorney Elaine K. Lou of the Criminal Division in Newark.

NEWARK, N.J. – U.S. Attorney Craig Carpenito announced today that he is reorganizing the District of New Jersey office to add additional resources to areas that are vital to the health and safety of the people of New Jersey.

U.S. Attorney Carpenito said this new structure will take best advantage of the depth and breadth of experience of the 130 Assistant U.S. Attorneys that staff the Newark, Trenton and Camden offices and focus their work on areas of criminal and civil enforcement that will pay the biggest dividends in protecting the public.

“After spending the past six weeks conducting an in-depth review of our operations, meeting with federal and state law enforcement leaders from across the state, and working closely with the Department of Justice, I have identified several areas of criminal activity where we need to intensify our efforts,” U.S. Attorney Carpenito said. “This sharpened focus will help us get the most dangerous criminals off our streets, address the ongoing opioid epidemic in our state, and stop the hackers and identity thieves who prey on our residents.”

U.S. Attorney Carpenito announced the following strategic changes in how the office will be organized:

• Three new units in the Criminal Division:

o Opioid Abuse Prevention and Enforcement – Among the first stand-alone units of its kind in the country, this unit will work with the existing Health Care and Government Fraud Unit and the Organized Crime and Drug Enforcement Task Force (OCDETF) Unit to target everyone who is making a living on these dangerous and addictive drugs, from the people who are running street-level distribution networks, to the doctors and pharmacists who turn a blind eye to over-prescribing and phony prescriptions, to the manufacturers and distributors who abdicate their responsibility to ensure these medications are being used lawfully. The Centers for Disease Control and Prevention reports that drug overdose deaths and opioid-involved deaths continue to increase in the United States. The majority of drug overdose deaths (66 percent) involve an opioid. In 2016, the number of overdose deaths involving opioids (including prescription opioids and heroin) was five times higher than in 1999. From 2000 to 2016, more than 600,000 people died from drug overdoses. On average, 115 Americans die every day from an opioid overdose. This unit will be enhanced by two Special U.S. Attorneys from the N.J. Office of the Attorney General, part of a joint state/federal effort to combat the growing problem of opioid abuse.

“U.S. Attorney Carpenito and I have forged a partnership dedicated to preventing illegal narcotics and prescription painkillers from flowing unchecked into our communities,” N.J. Attorney General Grewal said. “This collaboration of state and federal law enforcement allows us to share resources and strategies to identify, apprehend, and prosecute drug traffickers, unscrupulous doctors, and others who profit from the suffering and death caused by opioid addiction.”

o Violent Crimes Enforcement Unit – According to national crime data from the FBI, New Jersey’s homicide rate per 100,000 people rose from 3.9 to 4.2 and the rape rate rose from 10.7 to 16.2 between 2014 and 2016. The new Violent Crimes Enforcement Unit will work together with the Organized Crime/Gangs Unit to address these trends by targeting seven strategic areas:

• Federal Interest Murder/Major Violent Crimes
• Gang prosecution
• Carjacking
• Gun Trafficking
• Armed Bank Robberies
• Hobbs Act Robberies
• Human trafficking

o Cyber Crime Prevention and Enforcement – The attorneys in this unit are responsible for some of the most complex investigations the office handles, dealing with the unique and ever-changing issues presented by computer and communications technologies. Computer hacking, mass identity theft, ATM hacking – this unit will partner with the National Security and Economic Crimes units to focus on those cases and other emerging illegal uses of technology. In addition to litigating their own cases, they will provide their support and special expertise to federal and state partners as needed. The most recent report from the FBI Internet Crime Complaint Center found that, nationally, there were an average of 280,000 complaints per year from 2010 through 2016, and in 2016, the number of complaints reached 298,728, resulting in victim losses of $1.33 billion in that year alone. That same year, New Jersey received 6,690 complaints (13th in the nation), resulting in losses to victims of $24.5 million (11th in the nation.)

• A fourth unit, the current General Crimes Unit, will be recast as the Public Protection Unit. This unit will lead the office’s realignment with the Department of Justice’s renewed focus on the Project Safe Neighborhoods program, a nationwide strategy for using existing resources to most effectively combat violent crime in partnership with state and local law enforcement and the communities we serve. The unit handles any and all types of crime, but in this restructuring, the focus will be on criminals who prey on the public, including those who commit violent crimes and white collar scams, human trafficking and child exploitation.

“The changes I am announcing today will enhance our ability to do our most important job – protecting the public – more efficiently and with greater impact,” U.S. Attorney Carpenito said. “They will align our office with the priorities outlined and implemented by Attorney General Sessions and the Department of Justice. Of course, the office will continue to focus on all areas of federal interest, including national security, economic crimes, federal taxes, political corruption, civil rights, health care and government frauds.”

“The FBI dedicates significant resources in combating violent crime, cybercrime and the alarming rise in opioid abuse,” Special Agent In Charge of the FBI Newark Division Timothy Gallagher said. “We strongly support U.S. Attorney Carpenito’s focus to get the most dangerous drugs and criminals off our streets, particularly those who intend on defrauding our citizens and praying on the young and old. We look forward to continuing to work closely with the U.S. Attorney’s Office, so together we can make our state a safer place for our citizens.”

Valerie A. Nickerson, Special Agent in Charge of the Drug Enforcement Administration’s New Jersey Division said, “The men and women of the Drug Enforcement Administration work tirelessly to combat the current opioid epidemic in New Jersey. We look forward to the opportunity to continue our work with the U.S. Attorney’s Office and the New Jersey Attorney General’s Office to investigate and prosecute those who continue to profit off of the misery that this epidemic has caused.”

“We look forward to expanding upon our great working relationship with the U.S. Attorney’s Office,” Bureau of Alcohol, Tobacco and Firearms Special Agent in Charge John Devito said. “With this reorganization, both ATF and the USAO will be better situated to protect the citizens of New Jersey and mitigate the risk that violent crime poses to the public.”

U.S. Attorney Carpenito also announced new leadership of the office:

The First Assistant U.S. Attorney will be Rachael Honig, who is rejoining the office from the private sector. She worked for the U.S. Attorney’s Office for 14 years, most recently as Counsel to the U.S. Attorney. The Executive Assistant to the U.S. Attorney is Zach Intrater, who has been with the office for eight years in the Criminal Division, most recently as Deputy Chief of the Economic Crimes Unit. The Acting Counsel to the U.S. Attorney is Caroline Sadlowski, who has been with the office for 15 years, including nine years in the Appeals Division and six years in the Civil Division. Most recently, she was chief of the Civil Division. The Deputy U.S. Attorney, overseeing the Trenton and Camden Vicinages, is Thomas J. Eicher, who has been with the office more than 14 years, most recently as Chief of the Criminal Division.

“Let me be clear: The U.S. Attorneys’ Office for the District of New Jersey has a long and proud history,” U.S. Attorney Carpenito said. “Every U.S. Attorney who has sat in this seat has inherited a great office, and then worked to make it even better before handing it off to his or her successor. I intend to be no different. The changes I am announcing today are my first steps in making this office stronger and more successful.”

TRENTON, N.J. – A National City, California, man today pleaded guilty to his role in a conspiracy to transport 141 kilograms of narcotics from California to New Jersey, U.S. Attorney Craig Carpenito announced.

Hector Lucas-Ramos, 42, pleaded guilty before U.S. District Judge Brian R. Martinotti in Trenton federal court to an information charging him with conspiracy to possess with intent to distribute more than one kilogram of heroin and five kilograms of cocaine.

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

On Aug. 27, 2017, Lucas-Ramos was arrested in Essex County while he and Abraham Castro, 33, of San Diego, California, were driving a tractor trailer. After the tractor trailer was seen committing several traffic violations, law enforcement officers conducted a motor vehicle stop. During a subsequent search of the tractor trailer, law enforcement officers recovered five large duffle bags containing a total of 56 kilograms of heroin and 85 kilograms of cocaine.

Lucas-Ramos admitted today that he and Castro drove the tractor trailer from California to deliver the narcotics to other conspirators in New Jersey.

The conspiracy charge to which Lucas-Ramos pleaded guilty carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. His sentencing is scheduled for June 27, 2018. Castro pleaded guilty to his role in the conspiracy on Nov. 14, 2017, and awaits sentencing.

The government is represented by Assistant U.S. Attorney Meredith Williams of the U.S. Attorney’s Office Organized Crime Drug Enforcement Task Force (OCDETF)/Narcotics Unit.

U.S. Attorney Carpenito credited the Drug Enforcement Administration’s New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, with the investigation.

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

Defense counsel: Paula Notari Esq. New York

NEWARK, N.J. – BMW Financial Services N.A. (BMW FS) has agreed to pay over $2 million to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by failing to refund certain up-front car lease payments to 492 service members who lawfully terminated their motor vehicle leases early, U.S. Attorney Craig Carpenito and Acting Assistant Attorney General John Gore of the Justice Department’s Civil Rights Division announced today.

This is the first case brought by the Justice Department involving a motor vehicle lessor’s failure to refund lease amounts to service members who exercised their SCRA rights to terminate their leases.

The SCRA provides service members with protections that permit them to terminate motor vehicle leases early without penalty after entering military service or receiving qualifying military orders for a permanent change of station or to deploy. When service members lawfully terminate motor vehicle leases, the SCRA requires that they be refunded all lease amounts paid in advance.

BMW FS is a New Jersey-based auto financing company that provides auto leasing for customers of BMW, MINI, and Rolls-Royce. Individuals who lease vehicles from BMW FS, including service members, often contribute an up-front monetary amount at lease signing, in the form of a cash payment, credit for a trade-in vehicle, or rebates or other credits. A portion of this up-front amount can be applied to the first month of the lease and certain up-front costs such as licensing and registration fees. The remainder, which is called the capitalized cost reduction (CCR) amount, operates to reduce the monthly payment the lessee must make over the term of the lease.

The Department received complaints from two service members who were denied refunds of pre-paid CCR amounts by BMW FS. In October 2014, Kristi Steck, then a Senior Master Sergeant (SMSgt) in the U.S. Air Force stationed at Andrews Air Force Base in Maryland, leased a vehicle from BMW FS. Through the trade in of her previous car and a dealer rebate, she paid BMW FS an up-front CCR amount of approximately $4,000. SMSgt Steck made regular monthly lease payments for the next 10 months. After receiving orders from the Air Force ordering her to relocate to Japan, SMSgt Steck terminated her lease. BMW FS refused to refund any of the $4,000 she pre-paid when entering into the lease.

In February 2015, Technical Sergeant (TSgt) A. Menard, who was also stationed at Andrews Air Force Base, leased a vehicle from BMW FS. TSgt Menard, through a trade in and rebate, paid an up-front CCR amount of approximately $5,000. After making regular monthly lease payments for seven months, TSgt Menard received orders from the Air Force to deploy to Afghanistan. BMW FS refused to refund Tsgt Menard any part of the $5,000 he had paid at the lease signing.

After learning about SMSgt Steck’s and TSgt Menard’s stories, 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. The investigation revealed that BMW FS had failed to refund any portion of the pre-paid CCR amounts to 492 service members who had lawfully terminated their auto leases.

“The men and women who serve in the armed forces have made enormous sacrifices while selflessly protecting our nation from danger,” said U.S. Attorney Carpenito. “We must honor their sacrifice by ensuring that their rights are protected when duty calls for their relocation or deployment overseas. Through this agreement, we are pleased that hundreds of service members will be compensated for the damages they suffered when they were not refunded pre-paid car lease payments after they were deployed.”

“We ask a great deal of those who serve our nation, including asking them to drop their affairs to deploy or serve in a new location, sometimes at a moment’s notice,” said Acting Assistant Attorney General Gore. “Our men and women in uniform should be able to devote their entire energy to their service and defense of our nation, and the Justice Department is committed to protecting these rights when their obligations to the American people force them to change their plans.”

The agreement resolves a suit filed today by the United States in the U.S. District Court for the District of New Jersey. It covers all leases terminated by service members since Aug. 24, 2011.

The agreement requires BMW FS to refund to each service member portions of the pre-paid CCR amount based on how many days were remaining in the lease. In addition, BMW FS will pay indirect damages to each service member of three times the refund or $500, whichever is larger. The agreement also requires BMW FS to deposit $2,165,518.84 into an escrow account to compensate the 492 service members whose rights were violated under the SCRA. BMW FS also must pay $60,788 to the U.S. Treasury.

The agreement also requires BMW FS to revise its policies and procedures to ensure that service members who terminate their auto leases early receive a full refund of all eligible pre-paid CCR amounts.

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 service members 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. For more information about the Department’s SCRA enforcement, please visit www.servicemembers.gov.

Service members 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 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, Civil Division; and Trial Attorney Alan Martinson, U.S. Department of Justice, Civil Rights Division, Housing and Civil Enforcement Section.

TRENTON, N.J. – Two Trenton men were both sentenced to over seven years in prison today for conspiring to distribute over a kilogram of cocaine and 100 grams of crack cocaine in the Trenton area, U.S. Attorney Craig Carpenito announced.

Khalfini Richardson, 33, and Capitol T. Wellons, 32, were sentenced today to 156 and 84 months in prison, respectively. Both defendants previously pleaded guilty before U.S. District Judge Michael A. Shipp to Count One of an indictment charging them with conspiracy to distribute and possess 500 grams or more of cocaine and to manufacture, distribute, and possess 28 grams or more of cocaine base. Judge Shipp imposed the sentences today in Trenton federal court.

According to the documents filed in this case and statements made in court, from September 2013 through Jan. 13, 2016, Richardson and Wellons conspired with co-defendants Bobby Williams and William Enmond to distribute cocaine and manufacture crack cocaine from two adjacent residences in Trenton. Richardson and Wellons both admitted that they conspired to distribute and possess 1.72 kilograms of cocaine and 122.6 grams of cocaine base. 

In addition to the prison term, Judge Shipp sentenced both Richardson and Wellons to five years of supervised release. 

Enmond and Williams have also pleaded guilty. Williams awaits sentencing. Enmond was sentenced July 20, 2017 to 60 months in prison. 

U.S. Attorney Carpenito credited special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Valerie Nickerson in Newark, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Molly Lorber and Senior Litigation Counsel Joseph Gribko of the U.S. Attorney’s Office Criminal Division in Trenton.

18-072

Defense counsel:  Richardson: Brynn Giannullo Esq., New Brunswick, New Jersey
Wellons: Lawrence George Welle Esq., Wall, New Jersey
 

NEWARK, N.J. – A New Jersey-based securities trader was indicted today on additional charges stemming from his alleged role in orchestrating a massive, long-running market manipulation scheme that netted tens of millions of dollars in illegal profits between 2014 and 2016, U.S. Attorney Craig Carpenito announced.

Joseph Taub, 38, of Clifton, New Jersey, was first charged by complaint with securities fraud conspiracy in 2016. Today’s 13-count indictment charges him with securities fraud conspiracy, market manipulation conspiracy, multiple substantive securities fraud and market manipulation counts, and tax fraud conspiracy. Taub will be arraigned before U.S. District Judge John Michael Vazquez at a later date.

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

From 2014 to 2016, Taub and others conspired to manipulate securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts that they secretly controlled. As part of the scheme, Taub and others engaged in a series of near simultaneous transactions in targeted securities that were designed to artificially influence the market price of the securities and induce other market participants to trade based on the false impression that there was real market interest.

Taub and others allegedly used “straw accounts” that were held in their names, the names of their family members, and the names of entities they controlled. Many of the accounts were opened in the names of individuals who neither controlled the accounts nor traded the securities held in the accounts. Taub funded many of these accounts and used the straw account holders to conceal the scheme from regulators and law enforcement.

The fraudulent trades typically involved two types of straw accounts. First, a “Winner Account” purchased a large block of shares in a particular security. Next, a “Loser Account” placed multiple small orders in the same security to create upward pressure on the stock price. Once the price of the security moved higher due to the Loser Account’s manipulative orders, the conspirators sold their large position in the Winner Account and the shares from any executed trades in the Loser Account. While the Loser Accounts would generally lose money, the conspirators expected the gains from the Winner Accounts to more than make up for them.

In addition, Taub allegedly conspired with accountant Shaun Greenwald, 40, of Cedarhurst, New York, and others to defraud the United States by hiding from the brokerage firms and the IRS the identities of who actually controlled the straw accounts and who reaped the majority of the profits from the scheme. As a result, the profits from the straw accounts were taxed at the lower tax rates applicable to the straw account holders instead of the higher tax rates applicable to Taub and other members of the conspiracy.

The securities fraud conspiracy, market manipulation conspiracy, and tax fraud conspiracy counts each carry a maximum potential penalty of five years in prison. Each substantive count of securities fraud and market manipulation carries a maximum potential penalty of 20 years in prison. All the counts in the indictment also carry a $250,000 fine, or twice of the gross gain or loss from the offenses.

Greenwald pleaded guilty to his role in the scheme on Feb. 21, 2018 and awaits sentencing.

The U.S. Attorney’s Office has filed a separate civil action seeking forfeiture of brokerage accounts in which the manipulative trades were executed, bank and brokerage accounts funded with proceeds of the scheme, and Taub’s interest in companies in which he invested the proceeds of the scheme. Civil forfeiture cases are “in rem” proceedings – proceedings against things. The forfeiture claims in this case are based on allegations that the forfeitable property is proceeds of the securities fraud scheme or is property involved in laundering the proceeds of the scheme. That civil forfeiture action is pending.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and special agents of the U.S. Attorney’s Office, District of New Jersey, with the investigation. He also thanked the SEC’s New York Regional Office for its assistance.

The government is represented by Assistant U.S. Attorneys Daniel Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark; and Assistant U.S. Attorneys Sarah Devlin and Barbara Ward, Deputy Chief of the office’s Asset Recovery and Money Laundering Unit.

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

Defense counsel: Lawrence C. Lustberg Esq. and Steven Y. Yurowitz Esq. 

NEWARK, N.J. – A Cedarhurst, New York, man today admitted his role in a long-running market manipulation scheme that netted millions in illegal profits between 2014 and 2016, U.S. Attorney Craig Carpenito announced.

Shaun Greenwald, 40, pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging him with one count of securities fraud conspiracy and one count of tax fraud conspiracy.

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

From 2014 to 2016, Greenwald, Joseph Taub, 38, of Clifton, New Jersey, and others conspired to manipulate securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts that they secretly controlled. 

These “straw accounts” were held in the conspirators’ own names, the names of their family members, and the names of entities they controlled. Many of the accounts were opened in the names of individuals who neither controlled the accounts nor traded the securities held in the accounts. Taub funded many of these accounts and used the account holders to conceal the scheme from regulators and law enforcement.

The fraudulent trades typically involved two types of straw accounts. First, a “Winner Account” purchased a large block of shares in a particular security. Next, a “Loser Account” placed multiple small orders in the same security to create upward pressure on the stock price. Once the price of the security moved higher due to the Loser Account’s manipulative orders, the conspirators sold their large position in the Winner Account and the shares from any executed trades in the Loser Account. While the Loser Accounts would generally lose money, the conspirators expected the gains from the Winner Accounts to more than make up for them.

Taub was one of Greenwald’s clients. As part of the scheme, Greenwald opened brokerage accounts in his name or entities that he controlled. However, the vast majority of the funding for these accounts was provided by Taub, which Greenwald concealed on the account opening forms. Greenwald then provided the log-in and password information to Taub so that he and others could use the accounts for trades. In return, Greenwald was paid a portion of the profits made from his accounts.
 
Greenwald also admitted that he performed accounting services for the conspiracy, including calculated the taxes on profits made from the straw accounts. Taxes were paid at the straw account holders’ tax rates, which were typically lower than Taub’s rates, even though the account holders – per their agreements with Taub – were only getting a fraction of the profits. While Taub did provide the account holders funds for the taxes on his portion of the straw account profits, he failed to declare any of this income on his tax returns. 
 
Each count to which Greenwald pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 5, 2018.

Taub was charged by complaint on Dec. 12, 2016. The charges and allegations against Taub are merely accusations, and he is presumed innocent unless and until proven guilty.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and special agents of the U.S. Attorney’s Office, District of New Jersey, with the investigation. He also thanked the SEC’s New York Regional Office for its assistance.  

The government is represented by Assistant U.S. Attorneys Daniel Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark; and Assistant U.S. Attorneys Sarah Devlin and Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.

Defense counsel: Marc Agnifilo Esq. and Joshua Kirshner Esq., New York
 

NEWARK, N.J. – A Bayonne, New Jersey, man was sentenced today to 46 months in prison for robbing Bayonne Community Bank in Jersey City, New Jersey, on May 25, 2016, U.S. Attorney Craig Carpenito announced.

Patrick O’Boyle, 60, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an indictment charging him with one count of bank robbery. Judge Wigenton imposed the sentence today in Newark federal court.

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

On May 25, 2016, O’Boyle robbed the Bayonne Community Bank by approaching the teller and demanding all “your 100s, 50s, and 20s and make it quick because my car is double parked outside.” O’Boyle had his left arm clutched at his side as if he had something under his hooded sweatshirt, which the teller thought might have been a gun. The teller handed him cash, and O’Boyle fled the bank.

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

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and officers of the Jersey City Police Department, under the direction of Director James Shea, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the U.S. Attorney’s Office Criminal Division in Newark.

CAMDEN, N.J. – A retail director for a local candy company today admitted defrauding New Jersey state health benefits programs and other insurers out of over $2 million by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal announced.

Nicholas Tedesco, 44, of Linwood, New Jersey, 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.

Nicholas Tedesco’s brother and a leader in the conspiracy, Matthew Tedesco, pleaded guilty to his role in the scheme on Aug. 17, 2017.

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

From January 2015 through April 2016, Nicholas Tedesco and others recruited individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the information as the “Compounding Pharmacy.” 

The conspirators knew that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. The conspirators also knew that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular medications. 

An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid. 

Nicolas Tedesco and others recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications that were not medically necessary. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.

The pharmacy then paid one of Nicholas Tedesco’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Nicholas Tedesco and other members of the conspiracy. Nicholas Tedesco paid individuals with insurance coverage in cash to reward them for obtaining prescriptions.  

According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey. 

As part of the plea agreement, Nicholas Tedesco must forfeit $782,766.56 in criminal proceeds and pay restitution of at least $2,069,847.42. He 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 June 1, 2018. 

Fourteen other conspirators – including Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, Michael Pilate, and Shawn Sypherd – pleaded guilty from August through February 2018 and await sentencing.

U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Acting Special Agent in Charge Peter Nozka in New York, with the investigation leading to the guilty plea. He also thanked the Pensions and Financial Transactions Section of the Division of Law, within the Attorney General’s Office, under the direction of Attorney General Grewal and Division Chief Eileen Schlindwein Den Bleyker, for its assistance in the investigation.

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

18-070

Defense counsel: David Jay Glassman Esq., Philadelphia

CAMDEN, N.J. – A teacher in the Middle Township public schools today admitted defrauding New Jersey state health benefits programs and other insurers out of over $2,000,000 by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal announced.

Shawn Sypherd, 46, of Marmora, New Jersey, 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.

From January 2015 through April 2016, Sypherd served as a recruiter in the conspiracy and persuaded individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the informations as the “Compounding Pharmacy.” The conspirators learned that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply.

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

Sypherd and others recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications from the Compounding Pharmacy which were not medically necessary.  The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator. 

The pharmacy then paid one of Sypherd’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Sypherd and other members of the conspiracy.  Sypherd paid individuals with insurance coverage in cash to reward them for obtaining prescriptions. 

According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey.

Sypherd received approximately $354,264.06 for his role in the scheme.  

As part of the plea agreement, Sypherd must forfeit $354,264.06 in criminal proceeds and pay restitution of at least $2,439,548.32.

The defendant 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 June 1, 2018.

Thirteen other conspirators – Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, and Michael Pilate – pleaded guilty from August through January 2018 and await sentencing.

U.S. Attorney Carpenito credited agents of the Federal Bureau of Investigation’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and the U.S. Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka, with the investigation leading to the guilty pleas. 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 Jacqueline M. Carle and R. David Walk, Jr. of the U.S. Attorney’s Office in Camden.

Defense counsel:  Marc Neff, Esq., Philadelphia, PA

Two Russian nationals were sentenced yesterday to federal prison terms for their respective roles in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised 160 million credit card numbers and resulted in hundreds of millions of dollars in losses –  one of the largest such schemes ever prosecuted in the United States.

The  sentences were announced by Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, First Assistant U.S. Attorney William E. Fitzpatrick of the District of New Jersey and Director Randolph D. Alles of the U.S. Secret Service.

Vladimir Drinkman, 37, of Syktyvkar and Moscow, Russia, was sentenced to 144 months in prison.  Drinkman previously pleaded guilty before U.S. District Judge Jerome B. Simandle of the District of New Jersey to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud in a manner affecting a financial institution.  Dmitriy Smilianets, 34, of Moscow, previously pleaded guilty to conspiracy to commit wire fraud in a manner affecting a financial institution and was sentenced to 51 months and 21 days in prison.  Both men pleaded guilty in September 2015 before Judge Simandle, who imposed the sentences yesterday in Camden, New Jersey federal court.  In addition to the prison terms, Judge Simandle sentenced Drinkman to three years of supervised release and Smilianets to five years of supervised release. 

Drinkman and Smilianets were arrested in the Netherlands on June 28, 2012. Drinkman was extradited to the District of New Jersey on Feb. 17, 2015, and Smilianets was extradited on Sept. 7, 2012.

“Drinkman and Smilianets not only stole over 160 million credit card numbers from credit card processors, banks, retailers, and other corporate victims, they also used their bounty to fuel a robust underground market for hacked information,” said Acting Assistant Attorney General Cronan. “While mega breaches like these continue to affect millions of individuals around the world, hackers and would-be hackers should know that the Department of Justice will use all available tools to identify, arrest, and prosecute anyone who attacks the networks on which businesses and their customers rely.”

“These defendants operated at the highest levels of illegal hacking and trafficking of stolen identities,” First Assistant U.S. Attorney Fitzpatrick. “They used their sophisticated computer skills to infiltrate computer networks, steal information and sell it for a profit. Perpetrators of some of the largest data breaches in history, these defendants posed a real threat to our economy, privacy and national security, and cannot be tolerated.”

“This case demonstrates the investigative capabilities of the U.S. Secret Service and the collaborative efforts of our law enforcement partners, specifically the U.S. Attorney’s Office for the District of New Jersey, and the Dutch Ministry of Security and Justice,” Special Agent in Charge McKevitt said.  “The Secret Service will continue to develop innovative ways to protect the financial infrastructure of the United States and bring to justice cyber criminals who use emerging technologies to conduct business.”

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

Drinkman and Smilianets admitted to their roles in a conspiracy with three co-defendants to hack into the networks of corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information that the conspirators could exploit for profit, including the computer networks of NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard. 

According to the indictment in this case and statements made in court, the five defendants each played specific roles in the scheme.  Drinkman and Alexandr Kalinin, 31, of St. Petersburg, Russia, allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems. Drinkman and Roman Kotov, 36, of Moscow, allegedly specialized in mining the networks to steal valuable data. The hackers hid their activities using anonymous web-hosting services allegedly provided by Mikhail Rytikov, 30, of Odessa, Ukraine.  Smilianets sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 2” and “Hacker 1” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, Florida, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme. 

Kalinin, Kotov and Rytikov remain at large. 

The Attacks

According to documents filed in this case and statements made in court, the five defendants allegedly penetrated the computer networks of corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders, acquiring more than 160 million card numbers through hacking.

The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants allegedly placed malicious code, or malware, in the system.  This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks.  

Instant message chats obtained by law enforcement revealed the defendants allegedly often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway.  The defendants had malware implanted in multiple companies’ servers for more than a year. 
The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

According to documents filed in the case and statements made in court, after acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards. 

Covering Their Tracks

According to documents filed in the case and statements made in court, the defendants allegedly used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.  

Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.

To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges. The charges and allegations contained in indictments against the remaining defendants are merely accusations and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by special agents of the U.S. Secret Service, Newark Field Office and Criminal Investigative Division. The case is being prosecuted by by Trial Attorneys Andrew S. Pak and Richard Green and Deputy Chief of Litigation James Silver of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorney Justin Herring of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit and the Justice Department’s Office of International Affairs.  The Criminal Division’s Office of International Affairs also provided substantial assistance in this case.

Acting Assistant Attorney General John P. Cronan and U.S. Attorney Carpenito thanked public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.  They also credited the special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge Mark McKevitt, and the Criminal Investigative Division, under the direction of Special Agent in Charge Michael D’Ambrosio, for the ongoing investigation leading to yesterday’s sentencings.

NEWARK, N.J. – The owner and manager of a New Jersey hedge fund was convicted by a federal jury today for defrauding two investors of $4 million, U.S. Attorney Craig Carpenito announced.

Nicholas Lattanzio, 61, of Montclair, New Jersey, was convicted on all counts of an indictment charging him with two counts of wire fraud and two counts of securities fraud following a three-week trial before the Honorable Kevin McNulty in Newark federal court. 

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

From June 2013 through November 2014, Lattanzio orchestrated a large-scale scheme through which he, his hedge fund, the Black Diamond Capital Appreciation Fund L.P. (BD Fund), and several other related entities collected millions of dollars in upfront fees from two unsuspecting corporate investors in exchange for the promise of future loans or investment opportunities that did not materialize.  Instead of investing the victims’ money as promised, Lattanzio stole the majority of the funds and used them to pay himself more than $500,000 in salary and for numerous personal expenses, including the purchase of a $1 million home in Montclair, New Jersey, a new Range Rover, a diamond ring that cost $100,000, and the payment of half a million dollars in credit card debt that he incurred for other personal expenses.  Lattanzio lied to the victims about the status of their funds to conceal the scheme and mislead them into believing that their investments were safe.

The wire and securities fraud counts with which Lattanzio was convicted each 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 Government also forfeited a 2013 BMW 650 and various pieces of jewelry, and is seeking forfeiture of the home Lattanzio purchased in Montclair, New Jersey.

U.S. Attorney Carpenito credited special agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s conviction.  He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Marc P. Berger, and the N.J. Bureau of Securities, within the State Attorney General’s Division of Consumer Affairs, under the direction of Attorney General Gurbir S. Grewal.

The government is represented by Assistant U.S. Attorneys Nicholas P. Grippo and Daniel V. Shapiro of the Economic Crimes Unit, and Assistant U.S. Attorney Peter Gaeta of the Office’s Asset Recovery and Money Laundering Unit.

Defense Counsel: John D. Arseneault, Esq. and John J. Roberts, Esq., Chatham, New Jersey

NEWARK N.J. – A Georgia man today admitted using a fake driver’s license in order to obtain a check issued in response to false statements and representations, U.S. Attorney Craig Carpenito announced. 

Temilade Adekunle, 30, of Lawrenceville, Georgia, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging him with one count of aggravated identity theft and one count of conspiracy to commit wire fraud. 

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

Adekunle was a member of a conspiracy to fraudulently obtain money, including by committing identity theft, impersonating account holders and obtaining money from their accounts.  On Aug. 8, 2017, a member of the conspiracy contacted an entity where an individual (Victim 2) had an account. The caller impersonated Victim 2 and asked to withdraw approximately $85,000 from the account.  In response, the entity sent a check through a mail carrier to the account holder’s address. 

A member of the conspiracy caused the mail carrier to hold the package containing the check for Victim 2 at one of its branch locations. On Aug. 14, 2017, Adekunle entered the branch and, using a driver’s license with Adekunle’s picture and Victim 2’s name and address, obtained the package containing the check.  Sentencing is scheduled for May 30, 2018.

The conspiracy to commit wire fraud charge carries a maximum penalty of 20 years in prison, and a fine of $250,000, or twice the gross gain to the defendant or twice the gross loss to others, whichever is greater. The aggravated identity theft charge carries a sentence of two years in prison, which must be served consecutively to any prison sentence ordered for the conspiracy to commit wire fraud charge, and 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 Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Michael C. Mikulka in New York, with the investigation leading to today’s guilty plea. He also thanked the Unified Police Department of Greater Salt Lake, Utah, under the direction of Sheriff Rosie Rivera, for its role in the investigation.

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

Defense counsel: Jean Barrett Esq., Montclair, New Jersey

CAMDEN, N.J. - A Hammonton, N.J., man admitted today to engaging in a conspiracy to distribute 50 grams or more of crystal methamphetamine to customers in the Hammonton area of Atlantic County, New Jersey.

Ignacio Cuesta, 41, of Atlantic City, N.J., pleaded guilty before U.S. District Judge Noel Hillman in Camden federal court to an Information charging him with one count of conspiracy to distribute and to possess with intent to distribute 50 grams or more of methamphetamine.

Cuesta was arrested on June 24, 2016, in Hammonton, New Jersey after agreeing to sell two pounds of crystal methamphetamine to an undercover narcotics detective.  The two pounds of crystal methamphetamine were seized from Cuesta’s Ford Expedition, along with approximately $9,000 in cash.  Several additional pounds of crystal methamphetamine possessed by Cuesta were found hidden in vehicles and buried in a bucket in the ground in a parking lot for a local business in Hammonton.  Law enforcement officers also recovered additional cash inside the trunk of a vehicle owned and used by Cuesta, which was parked in the same parking lot in Hammonton. The total seized from Cuesta and this property was over $100,000. As part of the plea agreement, Cuesta agreed to forfeit all of the cash and two vehicles that were seized on the day of the arrest.

The drug conspiracy charge carries a minimum penalty of 10 years in prison, a maximum penalty of life imprisonment, and a maximum potential fine of up to $10,000,000.  Sentencing is scheduled for May 18, 2018.

U.S. Attorney Carpenito credited special agents with the Drug Enforcement Agency, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, with the investigation. He also thanked the Camden County Prosecutor’s Office, under the direction of Prosecutor Mary Eva Colalillo, for its assistance.

The government is represented by Assistant U.S. Attorney Patrick C. Askin of the U.S. Attorney’s Office’s Criminal Division in Camden.

Defense counsel:  Patrick Duffy, Esquire

NEWARK, N.J. – An Essex County, New Jersey, man was sentenced to 20 years in prison for robbing the same Capital One Bank in Newark twice, including once in an armed robbery, U.S. Attorney Craig Carpenito announced.

Gregory A. Jones, 61, of Newark, was previously convicted of one count of bank robbery, one count of armed bank robbery, and one count of using a firearm during a crime of violence. Jones was convicted following a one-week trial before U.S. District Judge Kevin McNulty, who imposed today’s sentence in Newark federal court.

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

On May 6, 2014, Jones entered the Capital One Bank wearing dark glasses and a scarf around his head and presented the teller a note demanding cash. After Jones left the bank with stolen money a hidden dye pack burst, and he left his glasses, scarf, and hat at the scene of the crime. Law enforcement officers recovered the glasses, hat, and scarf near the bank next to currency, saturated with ink from the dye pack. DNA recovered from the glasses, hat, and scarf matched a DNA sample that was lawfully obtained from Jones.

On Sept. 19, 2014, Jones entered the bank again, brandished a firearm from underneath his sweatshirt, and told a teller to give him money, stating that he had a gun and would shoot. Jones fired the weapon into the ceiling and left with several thousands of dollars. He was later identified using surveillance video and witness statements.

U.S. Attorney Carpenito credited special agents with the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; N.J. State Police, under the direction of Col. Patrick J. Callahan; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Robert D. Laurino; and the Newark Division of Public Safety, under the direction of Public Safety Director Anthony Ambrose, with the investigation leading to today’s sentence.

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

Defense counsel: Assistant Federal Defenders Carol Gillen and David Holman

CAMDEN, N.J. – Two Russian nationals were sentenced today to federal prison terms for their respective roles in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised 160 million credit card numbers and resulted in hundreds of millions of dollars in losses –  the largest such scheme ever prosecuted in the United States.

The sentencings were announced by New Jersey, Acting U.S. Attorney William E. Fitzpatrick, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, and Mark McKevitt, Special Agent in Charge of the U.S. Secret Service Newark Field Office.

Vladimir Drinkman, 37, of Syktyvkar and Moscow, Russia, previously pleaded guilty before U.S. District Judge Jerome B. Simandle of the District of New Jersey to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud. He was sentenced to 144 months in prison. Dmitriy Smilianets, 34, of Moscow, previously pleaded guilty to conspiracy to commit wire fraud in a manner affecting a financial institution and was sentenced to 51 months and 21 days (in prison) time served. Both men pleaded guilty in September 2013 before Judge Simandle, who imposed the sentences today in Camden federal court.

Drinkman and Smilianets were arrested in the Netherlands on June 28, 2012. Drinkman was extradited to the District of New Jersey on Feb. 17, 2015, and Smilianets was extradited on Sept. 7, 2012.

“These defendants operated at the highest levels of illegal hacking and trafficking of stolen identities,” Acting U.S. Attorney Fitzpatrick said. “They used their sophisticated computer skills to infiltrate computer networks, steal information and sell it for a profit. Perpetrators of some of the largest data breaches in history, these defendants posed a real threat to our economy, privacy and national security, and cannot be tolerated.”

“Drinkman and Smilianets not only stole over 160 million credit card numbers from credit card processors, banks, retailers, and other corporate victims, they also used their bounty to fuel a robust underground market for hacked information,” Acting Assistant Attorney General Cronan said. “While mega breaches like these continue to affect millions of individuals around the world, hackers and would-be hackers should know that the Department of Justice will use all available tools to identify, arrest, and prosecute anyone who attacks the networks on which businesses and their customers rely.”

“This case demonstrates the investigative capabilities of the U.S. Secret Service and the collaborative efforts of our law enforcement partners, specifically the U.S. Attorney’s Office District of New Jersey, and the Dutch Ministry of Security and Justice,” Special Agent in Charge McKevitt said. “The Secret Service will continue to develop innovative ways to protect the financial infrastructure of the United States and bring to justice cyber criminals who use emerging technologies to conduct business.”

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

Drinkman, Smilianets and three co-defendants hacked into the networks of corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information that the conspirators could exploit for profit, including the computer networks of NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.

The five defendants each played specific roles in the scheme. Drinkman and Alexandr Kalinin, 31, of St. Petersburg, Russia, specialized in penetrating network security and gaining access to the corporate victims’ systems. Drinkman and Roman Kotov, 36, of Moscow, also a hacker, specialized in mining the networks to steal valuable data. The hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 30, of Odessa, Ukraine. Smilianets sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, Florida, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.

Kalinin, Kotov and Rytikov are fugitives.

The Attacks

The five defendants penetrated the computer networks of corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired more than 160 million card numbers through hacking.

The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants placed malicious code, or malware, in the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were able to regain access through persistent attacks. 

Instant message chats obtained by law enforcement revealed the defendants often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway. The defendants had malware implanted in multiple companies’ servers for more than a year.

The defendants used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

After acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

The defendants used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement. 

Over the course of the conspiracy, the defendants communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.

To protect against detection by the victim companies, the defendants altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.

 

*          *          *

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges. The charges and allegations contained in indictments against the remaining defendants are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

In addition to the prison terms, Judge Simandle sentenced Drinkman and Smilianets to three years of supervised release.

Acting U.S. Attorney Fitzpatrick and Acting Assistant Attorney General Cronan credited the special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge McKevitt, and the Criminal Investigative Division, under the direction of Special Agent in Charge Michael D’Ambrosio, for the ongoing investigation leading to today’s sentencings. They also thanked public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.

The government is represented by Assistant U.S. Attorney Justin Herring of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit, Trial Attorneys Richard Green of the Criminal Division’s Computer Crime and Intellectual Property Section, and Judith Friedman of the Office of International Affairs.

NEWARK, N.J. – A Newark man with at least six prior felony convictions today admitted distributing narcotics and possessing multiple firearms, including two assault rifles and a 12-guage shotgun, U.S. Attorney Craig Carpenito announced.

Carlos Bess, 37, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an indictment charging him with two counts of illegal possession of a firearm as a convicted felon and four counts of distribution and possession with intent to distribute heroin and cocaine. 

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

Bess admitted that as a previously convicted felon, he knowingly possessed multiple firearms, including two Rebel Arms AR-15 rifles, a loaded .357 revolver, two loaded .380 pistols, a loaded 9 millimeter pistol, and a 12-gauge shotgun. Bess also admitted distributing heroin in an around Newark on Sept. 30, 2015 and Dec. 1, 2015, and knowingly possessing the heroin and more than 500 grams of cocaine that were found at his residence when he was arrested in December 2015.  Sentencing is scheduled for May 31, 2018.

U.S. Attorney Carpenito credited special agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), under the direction of Special Agent in Charge John B. Devito, and special agents with the Drug Enforcement Administration’s (DEA) New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark.

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

18-059

Defense Counsel: Frank Arleo, Esq., West Orange, New Jersey

NEWARK, N.J. – A North Tonawanda, New York, man today admitted running a large-scale scheme to defraud private and federally-funded health care benefit programs out of millions of dollars by submitting fraudulent claims for medically unnecessary compounded medications, U.S. Attorney Craig Carpenito announced.

Steven M. Butcher, 39, a former pharmaceutical sales representative turned owner and operator of MedMax LLC, a marketing company for compounded medications, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an information charging him with conspiracy to commit health care fraud and violate the Anti-Kickback Statute.

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

Butcher admitted that from July 2014 through April 2016, he organized a large-scale scheme to defraud health insurance plans by submitting phony claims for medically unnecessary prescription compounded medications, including scar creams, pain creams, and metabolic supplements marketed by MedMax for certain compounding pharmacies. 

Through MedMax, Butcher and others targeted individuals covered by private and federally-funded insurance plans that paid for compounded medications and convinced these individuals to obtain them regardless of medical necessity. Butcher also admitted that from December 2014 through June 2015, he conspired with others to pay kickbacks to persuade individuals to bill TRICARE – a health care benefit program for members of the military and their families – for medically unnecessary compounded medications.

During the scheme, Butcher would either send prescriptions directly to a compounding pharmacy or to a billing distribution company, which would then refer the prescription to a particular compounding pharmacy and submit a claim to the appropriate health insurance plan on behalf of that pharmacy. In return, Butcher received anywhere between 40 and 53 percent of the reimbursement received for each paid claim. At that time, health insurance plans were reimbursing compounding pharmacies anywhere between $3,000 and $43,000 for each compounded prescription.

To maximize profit in the compounding scheme, Butcher recruited several individuals as “sales representatives” who were paid a certain percentage for each compounded medication that they caused to be billed to a targeted health insurance plan. If a sales representative was a direct beneficiary of a targeted health insurance plan, Butcher paid them to obtain medically unnecessary compounded medications for themselves or their family. In addition, Butcher paid sales representatives for any individual that they recruited to the scheme. 

For instance, Butcher recruited former pharmaceutical employee Peter Pappas, 45, of Drexel Hill, Pennsylvania. As a MedMax sales representative, Pappas received medically unnecessary prescriptions for himself and also recruited several other individuals, including other former pharmaceutical sales representatives Jason Cerge, 41, of Media, Pennsylvania, and Julie Andresen, 40, of Haddonfield, New Jersey. Cerge recruited an individual identified in the information as “CC-1,” a New Jersey resident who targeted TRICARE beneficiaries.

Butcher paid Pappas for each of his personal compounded prescriptions and for each medically unnecessary medication Cerge, CC-1, and Andresen caused to be billed to a targeted health insurance plan.

Butcher and other conspirators, including Pappas, Cerge, and Andresen, took advantage of their relationships with physicians and other health care professionals to get prescriptions.  For instance, Butcher used his relationship with an individual identified in the information as “Physician Assistant 1,” to request that Physician Assistant 1 prescribe several medically unnecessary compounded medications for TRICARE beneficiaries. Physician Assistant-1 agreed and Butcher and others profited from phony claims to TRICARE.

As part of his plea agreement, Butcher must forfeit $4,584,597.92 in criminal proceeds and pay restitution of at least $45 million.

Of the $45 million loss Butcher caused to health care benefit programs, at least $3 million was attributable to TRICARE. 

For the conspiracy to commit health care fraud charge, Butcher faces a statutory maximum of 10 years in prison. For the conspiracy to violate the Anti-Kickback Statute charge, Butcher faces a statutory maximum of five years in prison. Each offense is also punishable by a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 18, 2018.

Pappas, Andresen and Cerge have all pleaded guilty to their roles in the scheme. Pappas and Cerge await sentencing. Andresen was sentenced Feb. 7, 2018 to 15 months in prison.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; and the U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey, with the ongoing investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorneys Erica Liu and Vikas Khanna, Deputy Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark and Assistant U.S. Attorney Jafer Aftab of the Asset Forfeiture and Money Laundering Unit.

To date, the New Jersey U.S. Attorney’s Office has prosecuted 19 individuals involved in various compounding pharmacy schemes across New Jersey to defraud health care benefit programs, and has recovered more than $4 million through forfeiture and restitution. These schemes have caused a total loss of more than $70 million to the health care industry, which has affected state, federal and private health care benefit programs. 

The New Jersey U.S. Attorney’s Office reorganized its health care practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.38 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Defense counsel: Herbert L. Greenman Esq., Buffalo, New York

TRENTON, N.J. – A Bronx, New York, man was sentenced to 51 months in prison for transporting fifteen kilograms of heroin hidden in a secret compartment on Christmas Eve in 2014, United States Attorney Craig Carpenito announced.

Dany Francisco-Valerio, 44, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an Information charging him with conspiracy to distribute heroin. Judge Sheridan imposed the sentence today in federal court.    

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

In or around December 2014, Francisco-Valerio engaged in a conspiracy with members of a drug trafficking organization to transport and distribute kilogram quantities of heroin.  On December 24, 2014, Francisco-Valerio was arrested in Warren County while transporting fifteen kilograms of heroin contained in a hidden compartment in his vehicle. Vionel Rondon Cortorreal, Francisco-Valerio’s conspirator, has also pleaded guilty before Judge Sheridan and is awaiting sentencing.

In addition to the prison term, Judge Sheridan sentenced Francisco-Valerio to 3 years of supervised release. 

U.S. Attorney Carpenito credited the Drug Enforcement Administration New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, and officers of the New Jersey State Police, under the direction of Acting Superintendent Col. Patrick J. Callahan, with the investigation leading to today’s sentencing. 

The government is represented by Assistant U.S. Attorneys Thomas S. Kearney and Jamari Buxton of the U.S. Attorney’s Office OC/Gangs Unit in Newark.

Defense counsel: John D. Lynch, Esq., Jersey City, New Jersey   

NEWARK, N.J. – A Bronx, New York, man who was arrested with 24 kilograms of narcotics stored in the trunk of a taxi made his initial appearance today in Newark federal court, U.S. Attorney Craig Carpenito announced.

Franklin Grullon, 43, is charged by complaint with one count of conspiracy to distribute five kilograms or more of cocaine. He appeared this afternoon before U.S. Magistrate Judge James B. Clark III and was released on $200,000 unsecured bond.

According to the complaint:

During a Drug Enforcement Administration (DEA) investigation of a drug trafficking ring operating in New Jersey, New York, and elsewhere, law enforcement officers learned that Grullon was supposed to collect a shipment of narcotics in the area.

On Feb. 11, 2018, law enforcement officers observed Grullon drive a New York taxi to meet with an individual at a gas station and truck stop in Pennsylvania. After the two met, Grullon drove away and checked into a hotel in White Haven, Pennsylvania.

Shortly thereafter, law enforcement officers spoke to Grullon, who said that he traveled to the area to drop off a passenger at a nearby mall. However, a search of the taxi’s trunk revealed two bags containing a total of 24 kilograms of a substance that tested positive for cocaine.

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

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

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 Scranton Resident Office, with the investigation leading to the charge.

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

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

NEWARK, N.J. – A former U.S. Postal Service (USPS) mail carrier today admitted that he accepted cash bribes in return for intercepting and delivering parcels containing illegal narcotics, U.S. Attorney Craig Carpenito announced.

Leonard Gresham, 50, of Rahway, New Jersey, pleaded guilty before U.S. District Judge Esther D. Salas in Newark federal court to an information charging him with one count of accepting bribes. He was released on $50,000 unsecured bond.

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

Gresham was a mail carrier at the USPS Springfield Station in Newark. From October 2014 through September 2017, Gresham accepted cash bribes from two individuals who were receiving parcels containing illegal narcotics through the mail. 

While on duty, Gresham intercepted these parcels and personally delivered them to various locations in Newark other than to the recipient address noted on the parcels. Gresham received payments of between $50 and $200 from the individuals for each delivery.

Gresham received a total of $14,900 in cash payments in exchange for delivering parcels containing illegal narcotics.

The bribery charge is punishable by a maximum potential penalty of 15 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 30, 2018.

U.S. Attorney Carpenito credited special agents with the USPS Office of Inspector General, under the direction of Special Agent in Charge Eileen Neff, Northeast Area Field Office, and inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca, with the investigation leading to today’s guilty plea.

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

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

NEWARK, N.J. – Two Newark men have been arrested and charged for their respective roles in a string of armed carjackings in Jersey City, New Jersey, in June 2017, U.S. Attorney Craig Carpenito announced today.

Tarrance Atkins, 23, and Jarrett Nelson, 19, are each charged by complaint with one count of conspiracy to commit carjacking, one count of conspiracy to use or possess a firearm during the commission of a crime of violence, one count of theft of a motor vehicle by force, violence, and intimidation, and one count of using or possessing a firearm during the commission of a crime of violence. Atkins made his initial court appearance today before U.S. Magistrate Judge Michael A. Hammer in Newark federal court. Nelson made his initial appearance Feb. 8, 2018, before Judge Hammer.

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

From June 12, 2017, to June 18, 2017, Nelson, Atkins, and others committed six carjackings and attempted carjackings in Jersey City. For each carjacking or attempted carjacking, the victims were inside their vehicles, parked on residential streets. On each occurrence, two conspirators exited a getaway car and forced the passengers out of their vehicles at gunpoint. Over the course of three different evenings, Nelson, Atkins, and others carjacked four newer-model, high-end vehicles and attempted to carjack two others. After carjacking the vehicles in Jersey City, Nelson, Atkins, and others fled to Newark, where the cars were discovered shortly thereafter.

The conspiracy to commit carjacking count carries a maximum potential penalty of five years in prison, and the count of conspiracy to use a firearm in furtherance of a crime of violence carries a maximum potential penalty of 20 years in prison. The carjacking count with which Atkins and Nelson are charged is punishable by a maximum potential penalty of 15 years in prison. The charge of use of a firearm in furtherance of a crime of violence is punishable by a maximum potential penalty of life in prison and a mandatory minimum sentence of seven years in prison, which must run consecutively to any other prison term. Each of the four counts also carries a maximum fine of $250,000.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to the charges. He also thanked the Hudson County Prosecutor’s Office, under the direction of Hudson County Prosecutor Esther Suarez, and the Jersey City Police Department for their contribution to the case.

The government is represented by Assistant U.S. Attorney Desiree Grace Latzer of the General Crimes Unit and Senior Litigation Counsel Robert Frazer of the Organized Crime/Gangs Unit.

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

Defense counsel: Nelson: John Yauch Esq., Federal Public Defenders Office, Newark
Atkins: David Schafer Esq., Lawrenceville, New Jersey

NEWARK, N.J. – Federal law enforcement authorities today took custody of the last of seven members of a drug trafficking organization that allegedly distributed over a kilogram of heroin and other narcotics in Newark and the surrounding areas, U.S. Attorney Craig Carpenito announced.

Carlos Velasquez, a/k/a “Birdie,” 39, of Newark, is charged by complaint with conspiracy to distribute one kilogram or more of heroin. Velasquez, who was in state custody on unrelated charges, appeared this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court and was detained.

According to the complaint:

From September 2016 through June 2017, Velasquez and others engaged in a heroin distribution conspiracy that operated in and around Newark.

Through the authorized interception of telephone calls and text messages, controlled purchases of heroin, the use of confidential sources of information, and other investigative means, law enforcement officers learned that Ahmad Johnson, a/k/a “OC,” 38, of Newark, was a leader of the conspiracy and was responsible for obtaining wholesale amounts of narcotics, including heroin and cocaine, and processing and packaging the narcotics for sale in and around Newark. Velasquez was an alleged heroin and cocaine dealer who got his narcotics from Johnson.

At times, after the narcotics were processed and packaged for sale, Johnson found users to “test” the narcotics to evaluate the quality, potency, and danger for broader distribution. After the narcotics were tested, members of drug trafficking organization sold the narcotics to other distributors and users in and around Newark. 

During the takedown, law enforcement officers conducted a series of search warrants and found over a kilogram of heroin, over 200 grams of crack cocaine, and over 150 grams of fentanyl.

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

The complaint charges six other defendants with conspiracy to distribute heroin. Johnson, Sacha Negron, 33, and Keith Henderson, 46, all of Newark, were arrested in June 2017. Cory Canzater, 45, and Willie McPhatter, 46, both of Newark, were arrested in September 2017. Willie McPhatter’s brother, Maurice McPhatter, 45, of Newark, was arrested Feb. 8, 2018. Negron, Henderson, Canzater, and Willie McPhatter are out on bail. Johnson and Henderson remain in custody.

U.S. Attorney Carpenito credited special agents of the Drug Enforcement Administration’s (DEA) New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark.

The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the U.S. Attorney’s Office’s Criminal Division in Newark.

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

Defense counsel: Michael A. Armstrong Esq., Willingboro, New Jersey

NEWARK, N.J. – A man and woman from Hazleton, Pennsylvania, were charged today with conspiring to distribute heroin pills that were made to look like 30-milligram tablets of oxycodone, U.S. Attorney Craig Carpenito announced.

Francisco Perez, 31, and Nadia Moronta Pena, 33, are charged by criminal complaint with conspiring to distribute more than 100 grams of heroin. The defendants appeared this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court. Perez was detained. Pena was released on $150,000 unsecured bond.

According to the complaint:

During the course of an investigation into the illegal manufacturing and distribution of opioids and other narcotics in New Jersey, an undercover law enforcement agent received information that Perez was illegally distributing oxycodone.

On Jan. 23, 2018, Perez allegedly met the undercover agent in Paterson, New Jersey, and sold the undercover agent approximately 1,000 pills that were similar in size, shape, color, and physical markings to 30-milligram oxycodone tablets manufactured by pharmaceutical companies. However, when the pills were tested in a lab, they were found to contain a mixture of Tramadol, a Schedule IV synthetic opioid, and heroin.

On Feb. 7, 2018, the undercover agent again met with Perez in Paterson, this time to purchase up to 40,000 pills. During the meeting, Perez motioned to Pena, who brought over a white bag containing thousands of pills for the undercover agent to examine before the deal. Perez and Pena were then arrested at the scene, and law enforcement agents recovered more than 20,000 additional pills that were similar in appearance to the heroin pills that Perez sold the undercover agent on Jan. 23, 2018.

Around the time Perez and Pena were arrested, law enforcement officers conducted a search of their residence in Pennsylvania. They recovered numerous other pills, approximately one kilogram of a powdery substance believed to be heroin, pill-press materials, and a box containing several bottles of liquid labeled “Fentanyl.” A firearm was recovered from inside a compartment in the wall of the residence.

U.S. Attorney Carpenito credited special agents with the DEA, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, as well as the DEA Scranton Resident Office, the Hazleton Police Department, and the Passaic County Sheriff’s Office with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Melissa Wangenheim of the Organized Crime Drug Enforcement Task Force/Narcotics Unit in Newark.

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

Defense Counsel: Perez: John Yauch Esq.
Pena: Paulette Pitt Esq.

NEWARK, N.J. – A former pharmaceutical employee was sentenced today to 15 months in prison for accepting thousands of dollars in exchange for filling medically unnecessary prescriptions for compounded medications for herself and her husband, causing losses of $956,885, U.S. Attorney Craig Carpenito announced.

Julie Andresen, 40, of Haddonfield, New Jersey, previously pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging her with conspiracy to commit health care fraud. Judge Vazquez imposed the sentence today in Newark federal court.

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

Andresen, a former employee of a New Jersey pharmaceutical company, admitted that from September 2014 through September 2015, she would receive payments from a marketing business identified in the information as “Company A” in return for filling and obtaining medically unnecessary prescription compounded medications for herself and her husband through the New Jersey pharmaceutical company’s prescription drug benefit plan.

Andresen approached a physician identified in the information as “Physician-1,” who was Andresen’s close friend, at social gatherings. Andresen would provide Physician-1 with preprinted prescription forms listing various compounded medications. Andresen requested that Physician-1 authorize certain compounded medications for her and her husband, such as scar creams and metabolic supplements. Physician-1 did authorize the prescriptions and multiple refills.

Andresen faxed prescriptions for the compounded scar creams and metabolic supplements authorized by Physician-1 to various compounding pharmacies designated by Company A that were located outside of New Jersey. The compounding pharmacies would fill and bill Andresen’s prescription drug benefit plan for the compounded prescriptions. The New Jersey pharmaceutical company’s prescription drug benefit plan reimbursed the compounding pharmacies anywhere between $13,572 and $43,689 for each compounded medication Andresen and her husband received.

The compounding pharmacies would then pay Company A an agreed upon percentage of the reimbursement amount. Company A would pay Andresen an agreed upon percentage of the amount Company A received from the compounding pharmacies. Andresen also requested multiple refills of her and her husband’s prescriptions, and received monetary payment for the refills as well. Altogether, Andresen received $161,378 from Company A for her role in the conspiracy. The New Jersey pharmaceutical company lost $956,885 from this scheme.

In addition to the prison term, Judge Vazquez sentenced Andresen to three years of supervised release, ordered her to pay restitution of $956,885 and to forfeit $161,378.

On June 29, 2016, Stephanie Naar, 28, of St. Louis, Missouri, who had been an employee of the same New Jersey pharmaceutical company as Andresen, pleaded guilty before Judge Vazquez and admitted to accepting thousands of dollars in exchange for obtaining and filling her own medically unnecessary prescriptions for compounded medications.

On July 19, 2016, Peter Pappas, 45, of Drexel Hill, Pennsylvania, another former employee of the same New Jersey pharmaceutical company as Andresen, also pleaded guilty before Judge Vazquez and admitted to accepting thousands of dollars in exchange for obtaining and filling his own medically unnecessary prescriptions for compounded medications. Pappas also admitted to recruiting others into this scheme to defraud.

Naar and Pappas are awaiting sentencing.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; and U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey, with the ongoing investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Erica Liu of the United States Attorney’s Office, Health Care and Government Fraud Unit in Newark.

The New Jersey U.S. Attorney’s Office reorganized its health care fraud practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.38 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

NEWARK, N.J. – A Passaic, New Jersey, man today admitted robbing six banks in Hudson, Union, and Passaic counties in June and July of 2016, U.S. Attorney Craig Carpenito announced.

Quentin Morales, a/k/a “Quinton Morales,” 27, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with three counts of bank robbery. He also admitted to robbing two additional banks and attempting to rob another.

Prior to his arrest in August 2016, Morales was one of Newark FBI’s most wanted bank robbers.

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

Morales robbed, or attempted to rob, the following New Jersey banks:

Bank

Location

Date

Wells Fargo Bank

Kearny, New Jersey

June 24, 2016

Capital One Bank (attempted)

Elizabeth, New Jersey

June 27, 2016

Wells Fargo Bank

Kenilworth, New Jersey

June 30, 2016

Wells Fargo Bank

Linden, New Jersey

July 6, 2016

Wells Fargo Bank

Clifton, New Jersey

July 13, 2016

Wells Fargo Bank

Union, New Jersey

July 25, 2016

At each bank, Morales presented a note demanding cash from bank tellers. For example, during the June 24, 2016 robbery, Morales handed the teller a note stating “You are being robbed. Give me all the large bills you have, no alarms, no noise.” On at least two occasions, Morales said he had a gun and urged bank tellers to hurry. He was apprehended on Aug. 2, 2016, by officers of the N.J. State Parole Board.

The bank robbery charges to which Morales pleaded guilty each carry a maximum penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for May 14, 2018.

U.S. Attorney Carpenito credited special agents of the FBI’s Violent Crimes/Interstate Theft Task Force, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s plea. He also thanked the N.J. State Parole Board and the Kearny, Elizabeth, Kenilworth, Linden, Clifton, Union Township and Newark police departments, as well as the Essex County Prosecutor’s Office for their efforts in the investigation and apprehension of Morales.

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

18-050

Defense counsel: Linda D. Foster, Esq., Assistant Federal Public Defender

TRENTON, N.J. – A Monmouth County, New Jersey, man today admitted being a felon in possession of a firearm while serving as the driver in a drive-by shooting in Asbury Park, New Jersey, U.S. Attorney Craig Carpenito announced.

Roosevelt Dante Harris, 39, of Asbury Park, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with one count of being a felon in possession of a firearm.

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

Harris admitted that despite having one or more prior felony convictions in Monmouth County, he knowingly possessed a Taurus, model PT709 Slim, 9 mm pistol on Nov. 24, 2016, in Asbury Park. Harris admitted that three days earlier he accompanied another individual to a firearms dealer in South Carolina, where the other individual purchased three firearms—including the Taurus pistol that Harris possessed – on Harris’ behalf. Harris transported the three firearms from South Carolina to New Jersey.

Harris admitted that on Nov. 24, 2016, while he was driving a black minivan in Asbury Park, he possessed the Taurus pistol, which was located behind the glove compartment of the black minivan. Harris admitted that another individual shot a firearm out of the black minivan while Harris was driving.

The count of being a felon in possession of a firearm carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for May 14, 2018. 

U.S. Attorney Carpenito credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge John B. Devito in Newark, New Jersey; officers of the Monmouth County Prosecutor’s Office, under the direction of Monmouth County Prosecutor Christopher J. Gramiccioni; and officers of the Asbury Park Police Department, under the direction of Deputy Chief David Kelso, with the investigation leading to today’s guilty plea.  U.S. Attorney Carpenito also thanked officers of the Lakewood Police Department, under the direction of Chief Gregory Meyer, for their assistance in the case.

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

18-051

Defense counsel: Andrea D. Bergman Esq., Assistant Federal Public Defender, Trenton
 

NEWARK, N.J. – An Orange, New Jersey, man today admitted his role in a scheme that defrauded New Jersey banks out of $1.5 million by deceiving them into crediting certain customer accounts that were controlled by members of the conspiracy, U.S. Attorney Craig Carpenito announced.

Chad Brown, 21, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to an information charging him with one count of bank fraud conspiracy.

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

From September 2015 through May 2017, Brown and others conspired to fraudulently obtain money from two victim banks. First, Brown and others obtained information from actual bank accounts belonging to customers of the two victim banks, including the customers’ bank account numbers and their personal identification numbers. In some instances, Brown and others obtained debit cards associated with the accounts or personally requested access from the account owners. 

Afterwards, members of the conspiracy called tellers at the victim bank, posed as bank employees, and deceived the tellers into crediting funds into the above customer accounts.

Once the funds were credited into the customer accounts, members of the conspiracy, including Brown, used debit cards associated with the accounts to obtain the fraudulently credited funds, either by withdrawing the funds directly from ATM machines at victim branch locations or purchasing postal money orders.

The victim banks suffered losses of more than $1.5 million from the scheme.

The charge to which Brown pleaded guilty 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. Sentencing is scheduled for May 15, 2018.

U.S. Attorney Carpenito credited inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca, with the investigation.

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

18-052

Defense counsel: Perry Primavera, Esq., Hackensack, New Jersey

NEWARK, N.J. – A Linden, New Jersey, man today admitted conspiring with officials at the Paterson Municipal Utilities Authority (MUA) and the Jersey City Childhood Development Centers Inc. (JCCDC) to fraudulently obtain payments for services he never provided, U.S. Attorney Craig Carpenito announced.

Carnell Baskerville, 51, pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him intentionally conspiring with a former commissioner with the Paterson MUA to commit extortion under color of official right and conspiring with Robert E. Mays, the former Executive Director of the JCCDC, to embezzle and obtain by fraud funds that were under the care and control of the JCCDC, an organization that received more than $10,000 in federal program benefits annually.

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

Baskerville was a self-employed contractor based in Linden who provided contracting services for both residential homes and commercial businesses. Around 2014, Baskerville became acquainted with an individual identified in the information as “Coconspirator 1,”who was then a commissioner with the since-dissolved Paterson MUA, which had been created to manage the hydroelectric plant on the Passaic River and care for certain surrounding properties.

Baskerville and Coconspirator 1 entered into an agreement whereby Coconspirator 1, who exercised control over Paterson MUA finances, would approve payments from the Paterson MUA to Baskerville’s company for services rendered, even though both Baskerville and Coconspirator 1 knew that Baskerville had not and would not perform those services.

Between December 2014 and May 2015, Coconspirator 1 wrote a series of Paterson MUA checks totaling $146,500 to Baskerville’s company. Baskerville deposited these checks in his bank account and kicked back a significant percentage in cash to Coconspirator 1 to reward him for his official assistance in carrying out the scheme.

Baskerville entered into a similar scheme with Mays, the Executive Director of the JCCDC, which operated as a non-profit organization created to serve impoverished and disabled children in Jersey City. In February 2014, Baskerville and Mays entered into a purported contract for Baskerville to provide kitchen renovation work on behalf of JCCDC, knowing full well that Baskerville had not and would not perform those services.

In late February 2014, Mays issued a JCCDC check in the amount of $29,675 to Baskerville. Baskerville and Mays met at a check cashing business in Jersey City where they cashed the check and split the proceeds between them.

The count of conspiracy to commit extortion by color of official right carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The count of conspiracy to commit theft concerning programs receiving federal benefits carries a maximum potential penalty of 10 years in prison and a $250,000 fine. As part of his plea, Baskerville must pay restitution in the amount of $176,175. Sentencing is scheduled for May 16, 2018.

Mays pleaded guilty to wire fraud on June 7, 2016 before U.S. District Judge Susan D. Wigenton. On July 31, 2017, he was sentenced to 18 months in prison and ordered to pay restitution in the amount of $257,418.20.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation.

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

Defense counsel: Arthur Abrams Esq., Jersey City

CAMDEN, N.J. – Three men who are already serving prison sentences for child pornography were arrested today at the Federal Correctional Institution-Fort Dix (FCI-Fort Dix) and charged with using contraband cellphones and micro SD cards to distribute, possess, and view images and videos of child sexual abuse within the prison, U.S. Attorney Craig Carpenito announced.

William H. Noble, 52, of Lowell, Massachusetts, and Charles Wesley Bush, 38, of Knoxville, Tennessee, are charged by complaint with one count each of conspiracy to distribute child pornography, distributing child pornography, and possession of child pornography on federal property. Jacob S. Good, 31, of Fredericksburg, Virginia, is charged by complaint with one count of possession of child pornography on federal property and one count of accessing with intent to view child pornography on federal property.

All three defendants were arrested this morning and are scheduled to appear this afternoon before U.S. Magistrate Judge Karen M. Williams in Camden federal court.

According to the complaints:

Noble allegedly transferred a micro SD card containing child pornography to a government informant at FCI-Fort Dix on April 19, 2017. The micro SD card included over a thousand images and videos, many of which depicted sexual abuse of children, including infants and toddlers. Noble allegedly made statements about downloading the child pornography himself and with the assistance of other inmates in the prison. Noble previously pleaded guilty in the District of Massachusetts to transportation and distribution of child pornography and is serving an 81-month sentence with a scheduled release date of March 8, 2018.

Bush jointly possessed the SD Card that was transferred by Noble on April 19, 2017, which he also allegedly used to download videos of children being sexually abused. Bush expected to be compensated as part of the transfer of the SD card to the government informant. Bush previously pleaded guilty in the Eastern District of Tennessee to three counts of distribution of child pornography and possession of materials containing child pornography. He is serving a 151-month sentence with a scheduled release date of May 24, 2024.

Good allegedly possessed and accessed child pornography while imprisoned at FCI-Fort Dix, which he downloaded from the “Dark Web” and stored on a micro SD card. Good allegedly told a government informant during a recorded conversation that he never intended to stop viewing child pornography. Good also described plans to take child pornography accumulated while in the prison home with him following his release. Good previously pleaded guilty in the Eastern District of Virginia to distribution of child pornography. He is serving a 60-month sentence with a scheduled release date of Feb. 6, 2018.

Due to the defendants’ prior convictions, the counts of distributing child pornography and conspiring to distribute child pornography are each punishable by a mandatory minimum sentence of 15 years in prison, a maximum potential penalty of 40 years in prison, and a $250,000 fine. The counts of possessing and accessing child pornography on federal property each carry a mandatory minimum sentence of 10 years in prison, a maximum potential penalty of 20 years in prison, and a $250,000 fine.

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

The charges against Good, Bush, and Noble stem from a long-term investigation by the FBI, which led to similar charges against five other FCI-Fort Dix inmates in April 2017. Charges against four of those inmates – Anthony C. Jeffries, Brian J. McKay, Christopher D. Roffler, and Jordan T. Allen – remain pending. A fifth inmate, Erik M. Smith, has since pleaded guilty to possession of child pornography.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s arrests. He also thanked officials of the Bureau of Prisons and FCI-Fort Dix for their assistance with the investigation.

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

Defense counsel: Charles Bush: David Rudenstein Esq.
Jacob Good: David Simon Esq.
William Noble: Marty Isenberg Esq.

NEWARK, N.J. – A Passaic County, New Jersey, couple was charged today for their respective roles in a food stamps fraud scheme, U.S. Attorney Craig Carpenito announced.

Ibrahim Zughbi, 64, and his wife, Miriam Zughbi, 59, of Wayne, New Jersey, are charged by complaint with Supplemental Nutrition Assistance Program (SNAP) benefit fraud and conspiracy to commit wire fraud. Ibrahim Zughbi is also charged with money laundering. Both appeared today before U.S. Magistrate Judge Michael Hammer in Newark federal court.

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

From January 2014 to the present, the defendants managed Jamaica Meat Market, a medium-size grocery store in Paterson, New Jersey, that was authorized to accept benefits provided by SNAP, formerly known as the Food Stamp Program. The program is administered by the U.S. Department of Agriculture. Retail food stores approved for participation in SNAP may sell food in exchange for SNAP benefits. They may not exchange SNAP benefits for cash. While the Zughbis ran the store, another individual owns the store and is the person registered with SNAP. According to the complaint, Ibrahim and Miriam Zughbi exchanged more than $4 million in SNAP benefits for cash between 2014 and 2017.

Every SNAP recipient receives an Electronic Benefit Transfer (EBT) card, similar to a debit card, with which to make purchases. Every retailer authorized to accept SNAP benefits has an EBT terminal. Food purchases are made by swiping the card at the terminal. After the customer enters a Personal Identification Number (PIN), the EBT terminal verifies the PIN, determines whether the customer’s account balance is sufficient to cover the proposed transaction and informs the retailer whether the transaction should be authorized or denied. The amount of the purchase is deducted electronically from the SNAP benefits reserved for the customer and the amount is credited to the retailer’s designated bank account. In addition to the high volume of SNAP benefits redemptions for Jamaica Meat Market indicating fraud, law enforcement agents verified the fraudulent exchange of SNAP benefits for cash through the use of a confidential source who, at the direction of law enforcement, engaged in 16 “purchases” at Jamaica Meat Market where one or both defendants exchanged money for SNAP benefits.

Ibrahim Zughbi had previously participated in SNAP when he was the owner of Neighborhood Supermarket, a grocery store that operated out of the same location as the Jamaica Meat Market. In March 2011, the USDA had permanently disqualified Ibrahim Zughbi from SNAP when Zughbi and the Neighborhood Supermarket were administratively charged with SNAP violations. Another individual took over the business, changed its name to Jamaica Meat Market, and certified in writing to the USDA that Ibrahim Zughbi would have nothing to do with the business or its participation in the program. Zughbi continued to run Jamaica Meat Market, and continued to exchange cash for SNAP benefits.

The complaint also charges Ibrahim Zughbi with money laundering. The bank account of Jamaica Meat Market, where the store receives SNAP payments, shows payments in excess of $471,000 to Ibrahim Zughbi and various family members not connected to the business, even though Ibrahim Zughbi is not permitted to associate with Jamaica Meat Market as a participant in SNAP.

Each of the counts with which the defendants are charged carries a maximum penalty of 20 years in prison and a fine of $250,000, or twice the gross pecuniary gain/loss. The count of money laundering with which Ibrahim Zughbi is charged carries a maximum penalty of 20 years in prison and a fine of $500,000 or twice the value of the property involved in the transaction.

U.S. Attorney Carpenito credited special agents of the U.S. Department of Agriculture – Office of Inspector General, under the direction of Special Agent in Charge Bethanne M. Dinkins, and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Michael McCarthy, with the investigation leading to today’s charges. He also thanked the Passaic County Prosecutor’s Office, the Wayne Township Police Department and the Paterson Police Department for their roles in the investigation.

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

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

NEWARK, N.J. – A Newark man was sentenced today to 42 months in prison for selling fake driver’s licenses through an online shop and filing fraudulent tax returns using stolen identity information, U.S. Attorney Craig Carpenito announced.

Alexis Scott Carthens, 40, previously pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him with one count of conspiracy to commit fraud in connection with authentication features and one count of conspiracy to defraud the government with respect to claims. Judge Linares imposed the sentence today in Newark federal court.

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

From October 2012 through August 2014, Ricardo Rosario, 35, of Jersey City, New Jersey, with the assistance of Carthens and Abraham Corcino, 36, of Jersey City, sold fake driver’s licenses over the Internet. In connection with their illegal operation, the defendants ran a website that was available at “fakeidstore.co” and “fakedlstore.com.”

A number of the fake driver’s licenses sold by Rosario and other conspirators were used by criminal actors in connection with “cash out” schemes where stolen credit card information, usually obtained through hacking or ATM skimming operations, was encoded on to counterfeit credit cards and used to steal cash from victims’ accounts.

The website sold fake New Jersey, Florida, Illinois, Pennsylvania, Rhode Island, and Wisconsin driver’s licenses, and the website boasted that the licenses had “scannable barcodes” and “real” holographic overlays. The price for each fake driver’s license was approximately $150, but the website offered bulk pricing for orders of 10 or more.

The website allowed its users to pay by bitcoin, a cryptographic-based digital currency, or MoneyPak, a type of prepaid payment card that could be purchased at retail stores. The “FAQ” section of the website indicated that orders would be received approximately one to two days after payment was received and described the website’s policy with respect to returns: “No Refunds. No snitching.”

Rosario created and ran the website. Corcino and Carthens assisted Rosario by creating and mailing the fake driver’s licenses purchased through the website. Corcino also maintained an Instagram account to promote the website.

At his plea hearing, Carthens admitted that his role was to create the driver’s licenses and to mail them to the website’s customers. Carthens also admitted that he believed that some of the website’s clients were using the fake driver’s licenses to commit credit card fraud.

Carthens also admitted to his involvement in a separate scheme, spanning from December 2012 through November 2013, to use information stolen from a medical lab to file false and fraudulent tax returns. Carthens admitted working with at least one other conspirator, who assisted Carthens by providing him with email addresses and physical addresses to receive the fraudulently claimed tax refund money.

In addition to the prison term, Judge Linares sentenced Carthens to three years of supervised release and ordered him to pay restitution of $121,922.32.

Rosario and Corcino have both pleaded guilty to related charges. Rosario was sentenced to 63 months in prison. Corcino was given three years of probation.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca; and special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation.

The government is represented by Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Assistant U.S. Attorney Barbara Ward, deputy chief of the asset forfeiture program.

Defense counsel: Wanda M. Akin Esq., Newark 

NEWARK, N.J. – A Jersey City police officer today admitted accepting corrupt payments in exchange for helping employers operate at worksites without the required presence of an off-duty police officer, U.S. Attorney Craig Carpenito announced.

Juan Berrios, 41, of Rahway, New Jersey, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an information charging him with one count of conspiracy to commit fraud and accept corrupt payments.

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

Berrios was a police officer with the Jersey City Police Department from 2004 to 2017. Under Jersey City’s municipal code, police officers performing off-duty work were not permitted to receive cash payments directly from other employers. Rather, the employers were supposed to pay Jersey City, which would then pay the off-duty police officers, minus certain fees, taxes and deductions.

Berrios agreed with numerous off-duty employers to accept payments directly from them and cut Jersey City out of the process. In exchange for the payments, Berrios permitted off-duty employers to operate at worksites without the presence of a police officer when such a presence was required.

On several occasions, Berrios submitted off-duty vouchers seeking and obtaining compensation for working as a traffic director or security guard. Berrios also sought and received overtime compensation for appearing in court at the same time he was purportedly performing off-duty work. As a result, Berrios fraudulently obtained compensation from Jersey City for separate assignments that occurred at the same time.

Berrios faces a maximum statutory penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Pursuant to the plea agreement, Berrios will forfeit $50,000. His sentencing is scheduled for April 16, 2018.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy A. Gallagher in Newark, with the investigation.

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

Defense counsel: Danny J. Welsh Esq. Jersey City, New Jersey