District of New Jersey

TRENTON, N.J. – An Essex County, New Jersey, woman was sentenced today to 21 months in prison for conspiring to obtain more than $1 million through fraudulently generated refund checks issued by the U.S. Treasury, U.S. Attorney Paul J. Fishman announced.

Marie Poitevien, 54, of Orange, New Jersey, previously pleaded guilty before U.S. District Judge Anne E. Thompson to an information charging her with conspiring to steal government funds.  Judge Thompson imposed the sentence today in Trenton federal 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:

• SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals.

• SIRF perpetrators 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.

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

From October 2009 through June 2013, Poitevien participated in a scheme in which her conspirators made fraudulent tax refund applications and had the U.S. Treasury send the refund checks to Poitevien’s residence. Poitevien then negotiated the checks by depositing them into her personal bank account and withdrawing the funds. Poitevien admitted cashing 298 tax refund checks, made payable to 139 different victims and totaling $1,101,689.  

In addition to the prison term, Judge Thompson sentenced Poitevien to two years of supervised release.

U.S. Attorney Fishman 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 sentence.

The government is represented by Assistant U.S. Attorney David W. Feder of the U.S. Attorney’s Office Criminal Division in Newark.

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

TRENTON, N.J. – A Monmouth County, New Jersey, man was arrested today for allegedly soliciting an underage girl to produce images of herself engaged in sexually explicit conduct and send the images to him through an online instant messaging application, U.S. Attorney Paul J. Fishman announced.

Matthew Kaminsky, 49, of Matawan, New Jersey, is charged by complaint with one count of production of images containing child pornography, and one count of receiving images containing child pornography via the internet. He is scheduled to appear later today before U.S. Magistrate Judge Lois H. Goodman in Trenton federal court.

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

Kaminsky allegedly met various underage girls through online chat applications and sent them naked pictures of himself. In late January of 2015, over the course of several days, he began corresponding with a 13-year-old girl over an online chat application and induced her to take nude pictures of herself and to send them to him.

In March 2015 law enforcement officers recovered computer equipment belonging to Kaminsky containing images and videos appearing to be of child sexual abuse.

Law enforcement officers located and interviewed the 13-year-old girl Kaminsky had chatted with online in January of 2015, and she confirmed that she had chatted online with Kaminsky and had sent him nude pictures of herself at his request.

The count of receipt of child pornography carries a mandatory minimum penalty of five years in prison, a maximum potential penalty of 20 years in prison, and a $250,000 fine. The count of production of child pornography carries a mandatory minimum penalty of 15 years in prison, a maximum potential penalty of 30 years in prison, and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Terence S. Opiola, with the investigation leading to the charges.

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

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

TRENTON, N.J. – A Hudson County, New Jersey, man was convicted today for posing as a teenage boy, and at times a teenage girl, to solicit underage females online to produce images of themselves engaged in sexually explicit conduct, possessing, and distributing those images to others, U.S. Attorney Paul J. Fishman announced.

Erik Vanderbeck, 49, of Bayonne, New Jersey, was convicted of two counts of production of child pornography, one count of distribution of child pornography and one count of possession of child pornography. The jury deliberated approximately one hour following a one-week trial before U.S. District Judge Freda L. Wolfson in Trenton federal court.

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

Vanderbeck allegedly met various minor females in Internet chat rooms while pretending to be a teenage boy, and at times, a teenage girl. Over the course of their correspondence, Vanderbeck would ask them to send him nude images of themselves. Once Vanderbeck received nude images, he would threaten to post the victim’s nude images online unless she sent more. In some cases, Vanderbeck would send nude images that he had received from certain of his victims to other minors to induce them to self-produce child pornography. When one of the victims threatened to report Vanderbeck to the authorities, he replied, “The cops will never catch me.”

Law enforcement officers executed a search warrant at Vanderbeck’s home in Bayonne on July 22, 2014. They recovered computer equipment belonging to Vanderbeck containing images appearing to be of child pornography. Several of his victims said they produced images of child sexual abuse out of fear and in response to his threats. 

Each count of production of child pornography carries a maximum potential penalty of 30 years in prison; the distribution count carries a maximum potential penalty of 20 years in prison; and the possession count carries a maximum potential penalty of 10 years in prison. All of the counts also are punishable by a $250,000 fine. Sentencing is scheduled for July 14, 2016..

U.S. Attorney Fishman credited postal inspectors with the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge James Ball in Newark, and the Bayonne Police Department, under the direction of Chief Drew Niekrasz, with the investigation leading to the today’s guilty verdict. He also thanked the Missouri Internet Crimes Against Children Task Force for its role in the investigation.

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

Defense counsel: Joshua Markowitz Esq., Lawrenceville

NEWARK, N.J. – A real estate developer and landlord of commercial buildings in Palisades Park, New Jersey, today admitted soliciting a $50,000 bribe payment to a Palisades Park borough official, U.S. Attorney Paul J. Fishman announced. 

Chung S. Kho, 68, of Fort Lee, New Jersey, pleaded guilty to an information charging him with one count of using facilities in interstate commerce to promote bribery.

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

Beginning in October 2010, Kho met with an individual (“Individual #1”) who sought to open a karaoke business at a multi-unit commercial building in Palisades Park owned by Kho. During the initial discussions between Kho and Individual #1 about opening the karaoke business, Kho guaranteed that there would be no problem in obtaining a change-of-use approval from Palisades Park to operate a karaoke business at the location. 

Kho admitted today that, between October and December 2010, he used his cellphone to facilitate the offer of a bribe payment by Individual #1 to a borough official in Palisades Park for a favorable decision by the borough official regarding the change-of-use request. According to Kho, that offer involved a payment of $30,000 to obtain approval for one karaoke business and $50,000 to obtain approval for two karaoke businesses. Individual #1 initially was hesitant to make the payment. By the time Individual #1 agreed to pay the bribe, Kho informed him that it was too late to make the payment.

The charge of using facilities in interstate commerce to promote bribery carries 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 July 18, 2016.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Garret Mountain Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher; special agents of the U.S. Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Christina Scaringi; 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 Jacques S. Pierre of the Special Prosecutions Division in Newark.

Defense counsel: Edward T. Kang, Esq., Alston & Bird LLP

NEWARK, N.J. – A Jamaican man was charged today with defrauding residents of the United States and Canada by allegedly tricking them into believing they had won multimillion-dollar lotteries and sweepstakes, U.S. Attorney Paul J. Fishman announced.

Ricardo Reid, 30, of Jamaica, West Indies, was indicted by a federal grand jury on one count of conspiracy to commit mail and wire fraud. He will be arraigned at a date to be determined.

According to the indictment:

Reid and others would target their victims by purchasing client lists of elderly and vulnerable individuals from brokers specializing in such information. Reid and his conspirators would initiate contact with the victims by telephone calls from Jamaica and falsely represent themselves to be lottery officials, bankers, or IRS agents.

Reid and his conspirators would then falsely inform the victims that they had won millions of dollars in a lottery or sweepstakes, but in order to redeem these winnings, they had to pay registration and/or other fees and taxes. Reid and his conspirators would direct the victims to pay the bogus fees using several methods, including mailing cash or money orders to other victims or to other members of the conspiracy in the United States. The money was then either smuggled to Jamaica or deposited into United States bank accounts and withdrawn from ATMs located in Jamaica. In other instances, the victims were directed to either wire the bogus fees through Western Union or Money Gram directly to Jamaica.

Reid and his conspirators would generally direct the victims to make repeated payments of fees until either the victim’s funds were depleted or, after realizing they had been scammed, the victims refused to make additional payments. At times, Reid and his conspirators induced and caused the victims to liquidate assets in order to pay the bogus fees.

Reid and his conspirators would conceal their identities using various methods, including aliases like “Robert Gates,” “Mr. Bogohazian,” “Damien Boswell,” “Mr. Washington,” and “Mark Anderson,” and the use of call forwarding and Magic Jack to make and receive calls while masking their phone number and location.

The alleged victims include an 88-year-old resident of Arkansas who lost $110,932; a 57-year-old New Jersey resident who lost $249,394; a 76-year-old Canadian resident who lost  $71,919; and a 74-year-old resident of Puerto Rico, who lost $64,433.

The conspiracy count with which Reid is charged carries maximum punishment of 20 years in prison and a fine of up to $250,000.

U.S. Attorney Fishman credited special agents of the Homeland Security Investigations, under the direction of Special Agent in Charge Terence Opiola in Newark; and the U.S. Postal Inspection Service, under the direction of Acting Postal Inspector in Charge James Ball, with the investigation leading to today’s indictment.

The USPIS is warning older Americans and caregivers to beware foreign lottery or sweepstakes schemes. No legitimate sweepstakes or lottery will ask for fees or taxes to be paid in order to claim a prize. Anyone contacted to play a foreign lottery or sweepstakes should follow these tips:

•           Don’t give out personal or financial information to anyone over the Internet or phone;

•           Never wire or send money to anyone, anywhere who says you’ve won a foreign lottery or sweepstakes;

•           Don’t be pressured into making an immediate decision;

•           Never purchase anything until you get all the information in writing. 

•           Visit deliveringtrust.com for helpful information on protection from fraud.

Mail fraud can be reported online at: www.postalinspectors.uspis.gov or by phone at 1-877-876-2455.

Defense counsel: K. Anthony Thomas Esq. Assistant Federal Public Defender, Newark

NEWARK, N.J. - The co-owner of a mortgage company that was responsible for a long-running, large-scale mortgage fraud scheme that caused millions in losses was sentenced today to 21 months in prison, U.S. Attorney Paul J. Fishman announced.

Lester Soto, 59, of Freehold, New Jersey, previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with two counts of conspiracy to commit bank fraud. Judge Salas imposed the sentence today in Newark federal.

According to the documents filed in this and other cases, as well as statements in court:

From September 2006 to May 2008, Soto and others, including fake document creators, a complicit lawyer and paralegal, and numerous loan officers, engaged in two related mortgage fraud conspiracies through a company called Premier Mortgage Services (Premier). Soto and his conspirators targeted properties in low-income areas of New Jersey. After recruiting “straw buyers,” Soto and his conspirators used a variety of fraudulent documents to make it appear as though the straw buyers possessed far more assets and income than they actually did.

Soto and his conspirators then submitted these fraudulent documents as part of mortgage loan applications to financial institutions. Relying on these fraudulent documents, financial institutions provided mortgage loans for the subject properties. Soto and his conspirators then split the proceeds from the mortgages among themselves and others by using fraudulent settlement statements (HUD-1s), which hid the true sources and destinations of the mortgage funds provided by financial institutions. The straw buyers had no means of paying the mortgages, and many of the properties entered into foreclosure proceedings.

Besides being a part-owner of Premier, Soto also acted as a loan officer on certain Premier mortgage loan applications and took a percentage of Premier’s profits. Soto employed document makers to create false and fraudulent documents and put mortgage brokers at Premier in contact with these document makers to create other false and fraudulent documents. Soto instructed Premier employees to provide him with loan files that Premier employees believed contained suspicious information, and then personally shepherded these loan files through to funding.

Other conspirators, including Isaac DePaula, 36, of Brazil, Adilson Silva, 50, of Union, New Jersey, and Klary Arcentales, 47 of Lyndhurst, New Jersey, were loan officers at Premier. DePaula, Silva, and Arcentales recruited straw buyers, provided false and fraudulent documents to the straw buyers, and incorporated false and fraudulent documents into loan applications to induce financial institutions to fund mortgage loans. The loan officers profited illegally by receiving a commission from Premier for each mortgage loan that they closed and also profited illegally by diverting portions of the fraudulently obtained mortgage proceeds for themselves, often via shell corporations or nominee bank accounts. 

Rodrigo Costa, 35, of Brazil, created false and fraudulent documents, including Verifications of Deposit (VODs) and Verifications of Rent (VORs). Other defendants, including DePaula and Silva, then submitted Costa’s fraudulent documents to support the fraudulent mortgage loan applications of various straw buyers. For his participation, Costa received a portion of the illicit proceeds from the mortgages.

Michael Rumore, 57, of Toms River, New Jersey, was an attorney licensed in the State of New Jersey. Rumore served as the settlement agent on mortgage loans brokered by DePaula, Silva, and Soto for various subject properties. Rumore used his status as an attorney to further the fraudulent scheme, including by convening closings, receiving funds from lenders, and preparing HUD-1s that purported to reflect the sources and destinations of funds for mortgages on subject properties B when in fact, the HUD-1s were neither true nor accurate. Rumore disbursed mortgage loan proceeds directly to Premier, Soto, DePaula, and Silva, including amounts not reflected on the HUD-1s. Rumore received a fee for each fraudulent loan in which he participated.

Antonio Pimenta, 48, of Neshanic Station, New Jersey,  owned and managed Kelmar Construction Co. (Kelmar).  Kelmar built properties that were then sold to straw buyers utilizing fraudulent mortgage loans brokered by Arcentales.

In addition to the prison term, Judge Salas ordered Soto to serve five years of supervised release and pay restitution of $3,745,344.19.

Arcentales, one of the loan officers who provided fraudulent documents to financial institutions on behalf of straw buyers, was recently sentenced on March 28, 2016 to 18 months in prison. Linda Cohen, 58, of Orange, New Jersey, a paralegal who served as the settlement agent on mortgage loans brokered by Arcentales for various properties, was sentenced on March 30, 2016 to six months in prison.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, for the investigation leading to today’s sentence. Fishman also thanked the Social Security Administration-Office of Inspector General, under the direction of Special Agent in Charge Edward Ryan, for its participation in the investigation.

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

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

Defense counsel: Jeff Smith Esq., of Teaneck, New Jersey             

TRENTON, N.J. – The former chief financial officer of a Bergen County business today admitted to embezzling millions of dollars from the company and to evading taxes, U.S. Attorney Paul J. Fishman announced.

Gomidas Garabed Hartounian, 52, of Franklin Lakes, New Jersey, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to a superseding information charging him with one count of wire fraud and one count of tax evasion.

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

From April 2007 through April 2014, Hartounian was the CFO for “Company A,” a for-profit company with its principal place of business in Englewood, New Jersey. Hartounian is also the sole owner of MGB LLC, a company registered to his residence. Hartounian fraudulently designated MGB as a vendor in Company A’s accounting system without disclosing that he controlled MGB. He directed Company A employees to issue checks to MGB for freight services that MGB supposedly provided Company A. When asked for the MGB invoices, he claimed that he was maintaining them in his office.

Because Hartounian didn’t have sole signatory power, he forged the signatures of the chief executive officer or the chief operating officer before depositing the checks into bank accounts that he controlled. Hartounian also had checks issued directly from Company A bank accounts to pay for his personal expenses, including real estate taxes to the Borough of Franklin Lakes for $6,562 in August 2011.

Hartounian also admitted that he filed a false federal tax return, Form 1040, for the calendar year 2012 in which he knowingly did not report $1.29 million in income that he received as the sole owner of MGB.  Instead, Hartounian falsely understated his income for 2012 as $133,290.

The wire fraud count carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss resulting from the crime.  The tax evasion count carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss resulting from the crime. Sentencing is scheduled for Aug. 16, 2016.

U.S. Attorney Fishman 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 leading to today’s guilty plea.

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

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

Defense counsel: Alan Silber Esq., Roseland, New Jersey

CAMDEN, N.J. – An Atlantic County, New Jersey, tax preparer was sentenced today to 24 months in prison for including fraudulent credits and deductions on federal tax returns for his clients in an effort to gain repeat business, U.S. Attorney Paul J. Fishman announced.

Tinh Van Vo, 50, of Egg Harbor Township, New Jersey, was previously convicted of 10 counts of aiding and assisting in the preparation of false federal income tax returns following a two-week trial before U.S. District Judge Robert B. Kugler, who imposed the sentence today in Camden federal court.

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

Vo prepared and filed fraudulent U.S. Individual Income Tax Returns through his business, TVO Services in Atlantic City, New Jersey. The returns attached schedules for fictitious educational credits, charitable contributions, and job expenses the taxpayers were not entitled to take – all to generate fraudulently inflated refunds.

In addition to the prison term, Judge Kugler sentenced Vo to one year of supervised release. During that time, Vo is prohibited from employment that allows him to prepare or assist in the preparation of tax returns. Vo must also pay a $15,000 fine.

U.S. Attorney Fishman 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 sentence.

The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the Criminal Division in Camden, New Jersey.

Defense counsel: William J. Hughes Jr. Esq., Atlantic City, New Jersey

NEWARK, N.J. – A compliance officer with the Union City Community Development Agency (UCCDA) today admitted that he manipulated the contractor selection process for federally funded residential rehabilitation and sidewalk replacement projects, causing losses of $40,000 to $95,000, U.S. Attorney Paul J. Fishman announced. 

Washington Borgono, 65, of North Bergen, New Jersey, pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to Count Two of an indictment charging him with obtaining by fraud, converting and misapplying government funds provided by the UCCDA.

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

Between April 2007 and February 2013, Borgono was a compliance officer at the UCCDA, a local government agency that received grant funds from the U.S. Department of Housing and Urban Development (HUD). Among the programs that the UCCDA operated through this HUD funding were a residential rehabilitation program and a sidewalk replacement program.

From 2007 through 2013, Borgono manipulated the contractor selection process for HUD-funded residential rehabilitation and sidewalk replacement projects through false and misleading bids. Borgono instructed certain contractors, such as Leovaldo Fundora, a contractor in Guttenberg, New Jersey, to obtain and submit higher, phony bids from other contractors in order to improperly award residential rehabilitation and sidewalk replacement projects to the contractors of Borgono’s choice. Borgono also instructed certain contractors, such as Joseph Lado, of Fort Lee, New Jersey, to bid under a certain specified amount on residential rehabilitation and sidewalk replacement projects, to ensure those contractors obtained those projects. At other times, Borgono instructed certain contractors to submit phony higher bids from their own companies, for residential rehabilitation and sidewalk replacement projects, to ensure that certain contractors were awarded the projects. In other instances, Borgono discarded the lowest bid for sidewalk replacement projects to ensure that Borgono’s contractors of choice would be awarded the sidewalk replacement projects. Fundora, Lado, UCCDA Inspector Johnny Garces and Stanley Parzych, a contractor in Jersey City, New Jersey, previously pleaded guilty to criminal charges for their roles in this scheme and await sentencing.

The charge of obtaining by fraud, converting and misapplying government funds carries a maximum potential penalty of 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss associated with the offense, whichever is greatest. Sentencing is scheduled for July 19, 2016.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher; and special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi, for the investigation leading to today’s guilty plea.   

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

Defense counsel: Louis A. Zayas Esq., North Bergen

NEWARK, N.J. – A California CPA was sentenced today to 57 months in prison for abusing his positions at a worship center in New Jersey and a non-profit in California to steal more than $4 million, U.S. Attorney Paul J. Fishman announced. 

Donald Gridiron, 51, of Pomona, California, previously pleaded guilty before U.S. District Judge Kevin McNulty to an information charging him with one count of wire fraud and one count of filing a false tax return. Judge McNulty imposed the sentence today in Newark federal court.

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

A religious facility located in Rahway, New Jersey, hired Gridiron based, in part, on his connections with individuals in the religious community as well as his standing within that community. The religious facility agreed to pay Gridiron a monthly salary and reimburse him for reasonable expenses related to his work. In addition, Gridiron was the treasurer for a non-profit entity registered in California.

Gridiron used his employment with the worship center and his status with the non-profit to illegally syphon money without their consent or authorization. In total, Gridiron transferred more than $4 million to accounts he controlled. Gridiron then used the funds for his own use, including mortgage payments, luxury car payments and gambling expenses. Gridiron also failed to report this income on his tax returns, including $950,000 he stole during the 2011 tax year.

In addition to the prison term, Judge McNulty sentenced Gridiron to three years of supervised release and ordered him to pay restitution of approximately $5.16 million ($4,815,964 to the worship center, including $200,000 to insurers who have paid the worship center; and $348,450 to the foundation.)

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and law enforcement officers of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

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: Candace Hom Esq., Newark, New Jersey

“College” Created as Part of Homeland Security Investigations Sting Operation

Twenty-one brokers, recruiters and employers from across the United States who allegedly conspired with more than 1,000 foreign nationals to fraudulently maintain student visas and obtain foreign worker visas through a “pay to stay” New Jersey college were arrested this morning by federal agents, U.S. Attorney Paul J. Fishman for the District of New Jersey announced.

The defendants (see chart below) were arrested in New Jersey and Washington by special agents with U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) and charged in 14 complaints with conspiracy to commit visa fraud, conspiracy to harbor aliens for profit and other offenses.  All the defendants, with the exception of Yanjun Lin aka Aimee Lin, 25, of Flushing, New York, will appear today before U.S. Magistrate Judge Steven C. Mannion of the District of New Jersey in Newark, New Jersey, federal court.  Lin will appear before U.S. Magistrate Judge Karen L. Strombom in the Western District of Washington federal court.

“‘Pay to Stay’ schemes not only damage our perception of legitimate student and foreign worker visa programs, they also pose a very real threat to national security,” U.S. Attorney Fishman said.  “Today’s arrests, which were made possible by the great undercover work of our law enforcement partners, stopped 21 brokers, recruiters and employers across multiple states who recklessly exploited our immigration system for financial gain.”

“While the United States fully supports international education, we will vigorously investigate those who seek to exploit the U.S. immigration system,” said Director Sarah R. Saldaña for ICE.  “As a result of this operation, HSI special agents have successfully identified and closed a gap in the student visa system and have arrested 21 individuals alleged to be amongst the system’s most egregious violators.”

“Individuals engaged in schemes that would undermine the remarkable educational opportunities afforded to international students represent an affront to those who play by the rules,” said Special Agent in Charge Terence S. Opiola for ICE Homeland Security Investigations.  “These unscrupulous individuals undermine the integrity of the immigration system.  Our special agents are committed to addressing, identifying fraud in order to better protect the system as a whole.”

According to the complaints unsealed today and statements made in court:           

The defendants, many of whom operated recruiting companies for purported international students, were arrested for their involvement in an alleged scheme to enroll foreign nationals as students in the University of Northern New Jersey, a purported for-profit college located in Cranford, New Jersey (UNNJ).  Unbeknownst to the defendants and the foreign nationals they conspired with, however, the UNNJ was created in September 2013 by HSI federal agents.

Through the UNNJ, undercover HSI agents investigated criminal activities associated with the Student and Exchange Visitor Program (SEVP), including, but not limited to, student visa fraud and the harboring of aliens for profit.  The UNNJ was not staffed with instructors or educators, had no curriculum and conducted no actual classes or education activities.  The UNNJ operated solely as a storefront location with small offices staffed by federal agents posing as school administrators.

UNNJ represented itself as a school that, among other things, was authorized to issue a document known as a “Certificate of Eligibility for Nonimmigrant (F-1) Student Status - for Academic and Language Students,” commonly referred to as a Form I-20.  This document, which certifies that a foreign national has been accepted to a school and would be a full-time student, typically enables legitimate foreign students to obtain an F-1 student visa.  The F-1 student visa allows a foreign student to enter and/or remain in the United States while the student makes normal progress toward the completion of a full course of study in an SEVP accredited institution. 

During the investigation, HSI special agents identified hundreds of foreign nationals, primarily from China and India, who previously entered the U.S. on F-1 non-immigrant student visas to attend other SEVP- accredited schools.  Through various recruiting companies and business entities located in New Jersey, California, Illinois, New York and Virginia, the defendants then enabled approximately 1,076 of these foreign individuals – all of whom were willing participants in the scheme – to fraudulently maintain their nonimmigrant status in the U.S. on the false pretense that they continued to participate in full courses of study at the UNNJ. 

Acting as recruiters, the defendants solicited the involvement of UNNJ administrators to participate in the scheme.  During the course of their dealings with undercover agents, the defendants fully acknowledged that none of their foreign national clients would attend any actual courses, earn actual credits, or make academic progress toward an actual degree in a particular field of study.  Rather, the defendants facilitated the enrollment of their foreign national clients in UNNJ to fraudulently maintain student visa status, in exchange for kickbacks, or “commissions.”  The defendants also facilitated the creation of hundreds of false student records, including transcripts, attendance records and diplomas, which were purchased by their foreign national conspirators for the purpose of deceiving immigration authorities. 

In other instances, the defendants used UNNJ to fraudulently obtain work authorization and work visas for hundreds of their clients.  By obtaining this authorization, a number of defendants were able to outsource their foreign national clients as full-time employees with numerous U.S.-based corporations, also in exchange for commission fees.  Other defendants devised phony IT projects that were purportedly to occur at the school.  These defendants then created and caused to be created false contracts, employment verification letters, transcripts and other documents.  The defendants then paid the undercover agents thousands of dollars to put the school’s letterhead on the sham documents, to sign the documents as school administrators and to otherwise go along with the scheme. 

All of these bogus documents created the illusion that prospective foreign workers would be working at the school in some IT capacity or project.  The defendants then used these fictitious documents fraudulently to obtain labor certifications issued by the U.S. Secretary of Labor and then ultimately to petition the U.S. government to obtain H1-B visas for non-immigrants.  These fictitious documents were then submitted to the U.S. Customs and Immigration Services (USCIS).  In the vast majority of circumstances, the foreign worker visas were not issued because USCIS was advised of the ongoing undercover operation.

In addition, starting today, HSI Newark is coordinating with the ICE Counterterrorism and Criminal Exploitation Unit (CTCEU) and the SEVP to terminate the nonimmigrant student status for the foreign nationals associated with UNNJ, and if applicable, administratively arrest and place them into removal proceedings.

The chart below outlines the charges for each defendant.  The charges of conspiracy to commit visa fraud and making a false statement each carry a maximum potential penalty of five years in prison and a $250,000 fine.  The charges of conspiracy to harbor aliens for profit and H1-B Visa fraud each carry a maximum penalty of 10 years in prison and $250,000 fine.

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

U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement, under the leadership of Director Saldaña; HSI Newark, under the leadership of Special Agent in Charge Opiola; U.S. Immigration and Customs Enforcement, Counterterrorism and Criminal Exploitation Unit, under the leadership of Unit Chief Robert Soria;  U.S. Citizenship and Immigration Services, Fraud Detection and National Security Section, under the leadership of Associate Director Matthew Emrich; the Student and Exchange Visitor Program, under the leadership of Deputy Assistant Director Louis M. Farrell; U.S. Citizenship and Immigration Services, Vermont Service Center, Security Fraud Division, under the leadership of Associate Center Director Bradley J. Brouillette; U.S. Department of State, Bureau of Consular Affairs, Office of Fraud Prevention Programs, under the leadership of Director Josh Glazeroff; and the FBI, Joint Terrorism Task Force, under the leadership of Timothy Gallagher in Newark, for their contributions to the investigation.

He also thanked the Accrediting Commission of Career Schools and Colleges (ACCSC), under the leadership of Executive Director Michale S. McComis, and the New Jersey Office of Higher Education, under the leadership of Secretary of Higher Education Rochelle R. Hendricks, for their assistance.  In addition, U.S. Attorney Fishman thanked the New Jersey Motor Vehicle Commission and the New York State Department of Motor Vehicles, as well as the U.S. Attorney’s Offices for the Central District of California, Eastern District of New York, Eastern District of Virginia, Southern District of New York, Central District of Illinois, Peoria Division, and the Northern District of Georgia for their help.

The government is represented by Assistant U.S. Attorney Dennis C. Carletta of the U.S. Attorney’s Office National Security Unit and Sarah Devlin of the Office’s Asset Forfeiture and Money Laundering Unit.

Defendant Name

Age

Residence

Charges

Jun Shen aka Jeanette Shen

32

Levittown, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Jiaming Wang aka Celine Wang,

34

Los Angeles, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Philip Junlin Li

 

33

Los Angeles, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Zitong Wen aka Kate Wen

27

Rowland Heights, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Chaun Kit Yuen aka Alvin Yuen

24

Rowland Heights, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Ting Zue aka Tiffany Xue

28

Flushing, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Yanjun Lin aka Aimee Lin

25

Flushing, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Zheng Zhang aka Vicky Zhang

26

New York, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Xue Yong Liu aka Jack Liu

29

New York, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Minglu Li aka Vivian Lee

36

Los Angeles, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Jason Li aka Jason Liu aka Fen Lee

43

Flushing, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

Tajesh Kodali

44

Edison, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Jyoti Patel

34

Franklin Park, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Shahjadi M. Parvin aka Sarah Patel

54

Hackensack, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Narendra Singh Plaha

44

Hillsborough, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Sanjeev Sukhija

35

North Brunswick, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Harpreet Sachdeva

26

Somerset, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Avinash Shankar

35

Bloomington, Illinois

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Karthik Nimmala

32

Smyrna, Georgia

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Govardhan Dyavarashetty aka Vardhan Shetty

35

Avenel, New Jersey

– H1-B Visa fraud

– False statements

– Conspiracy to harbor aliens for profit

 

Syed Qasim Abbas aka Qasim Reza aka Nayyer

41

Brooklyn, New York

– H1-B Visa fraud

– False statements

– Conspiracy to harbor aliens for profit

 

“College” created as part of Homeland Security Investigations sting operation

NEWARK, N.J. - Twenty-one brokers, recruiters, and employers from across the United States who allegedly conspired with more than 1,000 foreign nationals to fraudulently maintain student visas and obtain foreign worker visas through a “pay to stay” New Jersey college were arrested this morning by federal agents, New Jersey U.S. Attorney Paul J. Fishman announced.

The defendants (see chart below) were arrested in New Jersey and Washington by special agents with U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) and charged in 14 complaints with conspiracy to commit visa fraud, conspiracy to harbor aliens for profit, and other offenses. All the defendants, with the exception of Yanjun Lin, will appear today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.  Lin will appear before U.S. Magistrate Judge Karen L. Strombom in the Western District of Washington federal court.

“‘Pay to Stay’ schemes not only damage our perception of legitimate student and foreign worker visa programs, they also pose a very real threat to national security,” U.S. Attorney Fishman said. “Today’s arrests, which were made possible by the great undercover work of our law enforcement partners, stopped 21 brokers, recruiters and employers across multiple states who recklessly exploited our immigration system for financial gain.”

“While the United States fully supports international education, we will vigorously investigate those who seek to exploit the U.S. immigration system,” said ICE Director Sarah R. Saldaña. “As a result of this operation, HSI special agents have successfully identified and shut down multiple operations which have abused the student visa program.”

“Individuals engaged in schemes that would undermine the remarkable educational opportunities afforded to international students represent an affront to those who play by the rules. These unscrupulous individuals undermine the integrity of the immigration system,” said ICE Homeland Security Investigations Special Agent in Charge Terence S. Opiola. “Our special agents are committed to addressing, identifying fraud in order to better protect the system as a whole.”

According to the complaints unsealed today and statements made in court:           

The defendants, many of whom operated recruiting companies for purported international students, were arrested for their involvement in an alleged scheme to enroll foreign nationals as students in the University of Northern New Jersey, a purported for-profit college located in Cranford, New Jersey (UNNJ). Unbeknownst to the defendants and the foreign nationals they conspired with, however, the UNNJ was created in September 2013 by HSI federal agents.

Through the UNNJ, undercover HSI agents investigated criminal activities associated with the Student and Exchange Visitor Program (SEVP), including, but not limited to, student visa fraud and the harboring of aliens for profit.  The UNNJ was not staffed with instructors or educators, had no curriculum, and conducted no actual classes or education activities. The UNNJ operated solely as a storefront location with small offices staffed by federal agents posing as school administrators.

UNNJ represented itself as a school that, among other things, was authorized to issue a document known as a “Certificate of Eligibility for Nonimmigrant (F-1) Student Status - for Academic and Language Students,” commonly referred to as a Form I-20.  This document, which certifies that a foreign national has been accepted to a school and would be a full-time student, typically enables legitimate foreign students to obtain an F-1 student visa.  The F-1 student visa allows a foreign student to enter and/or remain in the United States while the student makes normal progress toward the completion of a full course of study in an SEVP accredited institution. 

During the investigation, HSI special agents identified hundreds of foreign nationals, primarily from China and India, who previously entered the U.S. on F-1 non-immigrant student visas to attend other SEVP- accredited schools.  Through various recruiting companies and business entities located in New Jersey, California, Illinois, New York, and Virginia, the defendants then enabled approximately 1,076 of these foreign individuals – all of whom were willing participants in the scheme – to fraudulently maintain their nonimmigrant status in the U.S. on the false pretense that they continued to participate in full courses of study at the UNNJ. 

Acting as recruiters, the defendants solicited the involvement of UNNJ administrators to participate in the scheme. During the course of their dealings with undercover agents, the defendants fully acknowledged that none of their foreign national clients would attend any actual courses, earn actual credits, or make academic progress toward an actual degree in a particular field of study.  Rather, the defendants facilitated the enrollment of their foreign national clients in UNNJ to fraudulently maintain student visa status, in exchange for kickbacks, or “commissions.”  The defendants also facilitated the creation of hundreds of false student records, including transcripts, attendance records, and diplomas, which were purchased by their foreign national conspirators for the purpose of deceiving immigration authorities. 

In other instances, the defendants used UNNJ to fraudulently obtain work authorization and work visas for hundreds of their clients.  By obtaining this authorization, a number of defendants were able to outsource their foreign national clients as full-time employees with numerous U.S.-based corporations, also in exchange for commission fees.  Other defendants devised phony IT projects that were purportedly to occur at the school.  These defendants then created and caused to be created false contracts, employment verification letters, transcripts, and other documents.  The defendants then paid the undercover agents thousands of dollars to put the school’s letterhead on the sham documents, to sign the documents as school administrators, and to otherwise go along with the scheme. 

All of these bogus documents created the illusion that prospective foreign workers would be working at the school in some IT capacity or project.  The defendants then used these fictitious documents fraudulently to obtain labor certifications issued by the U.S. Secretary of Labor and then ultimately to petition the U.S. government to obtain H1-B visas for non-immigrants.  These fictitious documents were then submitted to the U.S. Customs and Immigration Services (USCIS).  In the vast majority of circumstances, the foreign worker visas were not issued because USCIS was advised of the ongoing undercover operation.

In addition, starting today, HSI Newark is coordinating with the ICE Counterterrorism and Criminal Exploitation Unit (CTCEU) and the SEVP to terminate the nonimmigrant student status for the foreign nationals associated with UNNJ, and if applicable, administratively arrest and place them into removal proceedings.

The chart below outlines the charges for each defendant. The charges of conspiracy to commit visa fraud and making a false statement each carry a maximum potential penalty of five years in prison and a $250,000 fine. The charges of conspiracy to harbor aliens for profit and H1-B Visa fraud each carry a maximum penalty of 10 years in prison and $250,000 fine.

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

U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement, under the leadership of Director Sarah R. Saldaña; HSI Newark, under the leadership of Special Agent in Charge Terence S. Opiola; U.S. Immigration and Customs Enforcement, Counterterrorism and Criminal Exploitation Unit, under the leadership of Unit Chief Robert Soria;  U.S. Citizenship and Immigration Services, Fraud Detection and National Security Section, under the leadership of Associate Director Matthew Emrich; the Student and Exchange Visitor Program, under the leadership of Deputy Assistant Director Louis M. Farrell; U.S. Citizenship and Immigration Services, Vermont Service Center, Security Fraud Division, under the leadership of Associate Center Director Bradley J. Brouillette; U.S. Department of State, Bureau of Consular Affairs, Office of Fraud Prevention Programs, under the leadership of Director Josh Glazeroff; and the FBI, Joint Terrorism Task Force, under the leadership of Timothy Gallagher in Newark, for their contributions to the investigation.

He also thanked the Accrediting Commission of Career Schools and Colleges (ACCSC), under the leadership of Executive Director Michale S. McComis, and the N.J. Office of Higher Education, under the leadership of Secretary of Higher Education Rochelle R. Hendricks, for their assistance. In addition, U.S. Attorney Fishman thanked the N.J. Motor Vehicle Commission and the New York State Department of Motor Vehicles, as well as the U.S. Attorney’s Offices for the Central District of California, Eastern District of New York, Eastern District of Virginia, Southern District of New York, Central District of Illinois, Peoria Division, and the Northern District of Georgia for their help.

The government is represented by Assistant U.S. Attorney Dennis C. Carletta of the U.S. Attorney’s Office National Security Unit, and Sarah Devlin of the Office’s Asset Forfeiture and Money Laundering Unit.

 

Defendant Name

Age

Residence

Charges

Jun Shen, a/k/a “Jeanette Shen”

32

Levittown, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Jiaming Wang, a/k/a “Celine Wang,”

34

Los Angeles, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Philip Junlin Li

 

33

Los Angeles, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Zitong Wen, a/k/a “Kate Wen”

27

Rowland Heights, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Chaun Kit Yuen, a/k/a “Alvin Yuen”

24

Rowland Heights, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Ting Zue, a/k/a “Tiffany Xue”

28

Flushing, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Yanjun Lin, a/k/a “Aimee Lin”

25

Flushing, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Zheng Zhang a/k/a “Vicky Zhang”

26

New York, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Xue Yong Liu a/k/a “Jack Liu”

29

New York, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

Minglu Li, a/k/a “Vivian Lee”

36

Los Angeles, California

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Jason Li, a/k/a “Jason Liu,” “Fen Lee”

43

Flushing, New York

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

Tajesh Kodali

44

Edison, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Jyoti Patel

34

Franklin Park, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Shahjadi M. Parvin, a/k/a “Sarah Patel”

54

Hackensack, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Narendra Singh Plaha

44

Hillsborough, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Sanjeev Sukhija

35

North Brunswick, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Harpreet Sachdeva

26

Somerset, New Jersey

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Avinash Shankar

35

Bloomington, Illinois

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Karthik Nimmala

32

Smyrna, Georgia

– Conspiracy to commit visa fraud

– Conspiracy to harbor aliens for profit

 

Govardhan Dyavarashetty, a/k/a “Vardhan Shetty”

35

Avenel, New Jersey

– H1-B Visa fraud

– False statements

– Conspiracy to harbor aliens for profit

 

Syed Qasim Abbas a/k/a “Qasim Reza,” and “Nayyer”

41

Brooklyn, New York

– H1-B Visa fraud

– False statements

– Conspiracy to harbor aliens for profit

 

TRENTON, N.J. – A Monmouth County, New Jersey, man was sentenced today to 87 months in prison for possessing 162 grams of methamphetamine with intent to distribute, U.S. Attorney Paul J. Fishman announced.

Theodore Santaguida, 42, of Ocean Township, New Jersey, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with possessing with intent to distribute methamphetamine. Judge Cooper imposed the sentence today in Trenton federal court.

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

On Dec. 23, 2014, a task force of FBI and Ocean Township law enforcement executed a federal search warrant at Santaguida’s apartment, and seized 162 grams of methamphetamine.

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

U.S. Attorney Fishman 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 sentencing.  He also thanked officers of the Ocean Township Police Department under the direction of Chief of Police Steven R. Peters for their assistance.

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

Defense counsel: Scott Krasny Esq., West Trenton, New Jersey

NEWARK, N.J. –  Two New Jersey men were sentenced to prison today for extorting thousands of dollars in corrupt payments in connection with arranging approvals to provide landfill materials for a Hudson County Improvement Authority (“HCIA”) project, U.S. Attorney Paul J. Fishman announced.

Gerard Pica, 66, of Middletown, New Jersey, and James Castaldo, 60, of Beachwood, New Jersey were sentenced to 35 and 51 months in prison, respectively. Pica previously pleaded guilty before U.S. District Judge Jose L. Linares to Count Four of an indictment charging him with conspiracy to commit extortion under color of official right. Castaldo previously pleaded guilty before Judge Linares to Count One of the indictment charging him with conspiracy to commit extortion under color of official right. Judge Linares imposed both sentences today in Newark federal court.

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

The HCIA was overseeing the construction of a nine-hole public golf course located at Lincoln Park West in Jersey City, New Jersey (the “LPW project”). As part of its construction, the LPW project required several hundred thousand cubic yards of soil, fill material and crushed stone to be incorporated into the site, as well as to serve as road bedding during the construction of the golf course. As the overseer of the LPW project, one of the functions of the HCIA – either directly or through a designated contractor – was to serve as a gatekeeper for any material to be delivered to the LPW site. It was the HCIA’s responsibility to solicit, evaluate and decide which contractors’ proposals to accept for the provision of soil and fill material for the LPW project. 

Castaldo ran Renda Enterprises LLC, which provided interstate transportation and broker services that moved or received recycled waste and other materials. Pica had been employed by the HCIA as an environmental scientist and had the ability to influence the HCIA’s decisions regarding the selection of contractors to provide soil and fill material to the LPW project. An individual referred to in the indictment as “Employee 1” also had authority over the selection of contractors seeking to provide materials for the project site.

From August 2010 through November 2011, Pica, Castaldo and others schemed to obtain payments from certain contractors in exchange for Pica and Employee 1’s assistance in getting approval for certain companies to provide materials for the LPW project.

Pica admitted that he arranged to obtain corrupt payments from “Individual 3,” the owner of a recycling business in Bayonne, New Jersey. Pica admitted using his authority at the HCIA to ensure that Individual 3 and Individual 3’s company received approval to provide Class B materials, including crushed stone, for the LPW project. As part of the agreement, Individual 3 would pay Castaldo a fee – $2 per cubic yard of fill and soil material delivered to the site – for the benefit of Pica, Castaldo and Employee 1. Pica admitted receiving approximately $6,600 in December 2010 as a partial payment of his share. In addition, Pica admitted to creating a fraudulent invoice from a separate company which he owned for monies purportedly owed to him by Renda Enterprises. Pica admitted that he accepted a check for $6,000 from Renda Enterprises in April 2011, knowing that this amount was further payment of his share which he extorted from Individual 3.    

Castaldo admitted that in early 2011, he met with Pica and a person referred to in the indictment as “Individual 1,” who was the owner of a full service environmental consulting firm seeking authorization to dump soil and fill material at the LPW site. Castaldo admitted that he, Pica and Individual 1 agreed upon the amount per cubic yard that Individual 1 would have to pay in return for Pica’s  assistance in ensuring Individual 1 would receive authorization to dump the material at the LPW site. Castaldo acknowledged that in July 2011, Renda Enterprises received two payments totaling more than $8,600 as corrupt payments for allowing Individual 1 to dump more than 2,600 cubic yards of fill materials at the LPW site. 

In addition to the prison terms, Judge Linares sentenced both Pica and Castaldo to three years of supervised release. They are also jointly responsible for restitution of $53,861.

U.S. Attorney Fishman credited special agents from the FBI, under direction of Special Agent in Charge Timothy Gallagher in Newark and special agents with the N.J. State Commission of Investigation, under the direction of Acting Executive Director Lee C. Seglem, for the investigation.

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

Defense counsel:

Pica: Edward Plaza, Esq., Newark

Castaldo: Matthew J. Heagen, Toms River

The Justice Department announced today it has reached a comprehensive settlement with the city of Newark, New Jersey, that will bring wide-ranging reforms and changes to the Newark Police Department (NPD).  The agreement, which is subject to court approval, resolves the department’s findings that NPD has engaged in a pattern or practice of unconstitutional stops, searches, arrests, use of excessive force and theft by officers in violation of the First, Fourth and 14th Amendments.  The proposed consent decree also resolves the department’s findings that NPD’s law enforcement practices had a disparate impact on minorities in Newark.

The Justice Department’s findings were announced in July 2014 following a comprehensive investigation into the NPD started in May 2011.  The investigation also found that this pattern of constitutional violations has eroded public confidence in the police.  As a result, public safety suffers and the job of delivering police services was more difficult and more dangerous. 

“This agreement holds the potential to make Newark a national model for constitutional, effective and accountable community policing in the 21st century,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Department of Justice looks forward to working closely with the city as we implement this agreement and begin to change policies, improve systems and rebuild trust between Newark police officers and the residents they serve.”

“The men and women who wear the uniform of the Newark Police Department bring enormous dedication, integrity and pride to their jobs every day,” said U.S. Attorney Paul Fishman of the District of New Jersey.  “At the same time, the department is challenged in fundamental ways and has engaged in a pattern and practice of unconstitutional policing in a broad range of areas.  And it is also clear that the Police Department’s relationship with the people of the city has suffered dramatically from the combination of those practices.  Community trust has deteriorated, and that in turn has compromised the effectiveness of the Department.  Today we are taking a major step toward breaking that cycle.”

Under the consent decree, the city of Newark and NPD will implement comprehensive reforms in 12 substantive areas.  The agreement ensures that:

• NPD will improve officer training to ensure that officers develop the necessary technical and practical skills required to carry out NPD directives consistently.
• NPD will revise search and seizure policies, training and supervision to ensure that all stops, searches and arrests are conducted in accordance with the Constitution and in a manner that takes into account community priorities.
• NPD will integrate bias-free policing principles into all levels of the organization, including comprehensive training of officers and supervisors.
• NPD will reform use of force policies, including requirements for using de-escalation techniques whenever possible and appropriate, prohibiting retaliatory force and ensuring mandatory reporting and investigation standards following use of force.
• NPD will deploy in-car and body-worn cameras to promote accountability, instill community confidence and improve law enforcement records.
• NPD will implement measures to prevent theft of property by officers, including robust reporting and complete accounting of property or evidenced seized.
• Office of Professional Standards investigators will be appropriately qualified and trained.  Investigations of civilian complaints will be conducted in an objective, thorough and timely manner.
• Newark will create a civilian oversight entity to give voice to and pursue concerns of its residents. 
• NPD will develop protocols for conducting compliance reviews and integrity audits.
• NPD will implement steps to ensure that the disciplinary process is fair and consistent.
• NPD will improve records management and early intervention systems and collect data on all uses of force and investigatory stops, searches and arrests, and develop a protocol for the comprehensive analysis of the data.  The information will be publicly reported.  
• NPD will strengthen its public information programs to ensure that members of the public are informed of NPD’s progress toward reform.

Newark and the Department of Justice have jointly proposed Peter Harvey to lead the team of experts that will monitor the city’s compliance with the agreement.  Harvey is a former New Jersey Attorney General, and has experience under a Justice Department consent decree in the New Jersey State Police Case.  He brings a deep understanding of issues specific to New Jersey and Newark and has direct experience overseeing organizational change and law enforcement reforms.  Harvey will propose a team of local and nationally-recognized experts who are all committed to ensuring effective and constitutional policing, subject to the approval of the city and the Justice Department.

The investigation was conducted jointly by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office of the District of New Jersey.  For more information on the Civil Rights Division, please visit www.justice.gov/crt.  For more information about the U.S. Attorney’s Office of the District of New Jersey, please visit http://www.justice.gov/usao/nj.   

NPD Consent Decree

NPD Complaint

NPD Fact Sheet

SPL Police Accomplishments

NEWARK, N.J. – The Justice Department announced today it has reached a comprehensive settlement with the city of Newark, New Jersey, that will bring wide-ranging reforms and changes to the Newark Police Department (NPD).  The agreement, which is subject to court approval, resolves the department’s findings that NPD has engaged in a pattern or practice of unconstitutional stops, searches, arrests, use of excessive force and theft by officers in violation of the First, Fourth and 14th Amendments.  The proposed consent decree also resolves the department’s findings that NPD’s law enforcement practices had a disparate impact on minorities in Newark.

The Justice Department’s findings were announced in July 2014 following a comprehensive investigation into the NPD started in May 2011.  The investigation also found that this pattern of constitutional violations has eroded public confidence in the police.  As a result, public safety suffers and the job of delivering police services was more difficult and more dangerous. 

“This agreement holds the potential to make Newark a national model for constitutional, effective, and accountable community policing in the 21st century,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Department of Justice looks forward to working closely with the city as we implement this agreement and begin to change policies, improve systems and rebuild trust between Newark police officers and the residents they serve.”

“The men and women who wear the uniform of the Newark Police Department bring enormous dedication, integrity, and pride to their jobs every day,” Paul Fishman, U.S. Attorney for the District of New Jersey, said. “At the same time, the department is challenged in fundamental ways and has engaged in a pattern and practice of unconstitutional policing in a broad range of areas. And it is also clear that the Police Department’s relationship with the people of the city has suffered dramatically from the combination of those practices.  Community trust has deteriorated, and that in turn has compromised the effectiveness of the Department.  Today we are taking a major step toward breaking that cycle.”

Under the consent decree, the city of Newark and NPD will implement comprehensive reforms in 12 substantive areas.  The agreement ensures that:

• NPD will improve officer training to ensure that officers develop the necessary technical and practical skills required to carry out NPD directives consistently.

• NPD will revise search and seizure policies, training and supervision to ensure that all stops, searches and arrests are conducted in accordance with the Constitution and in a manner that takes into account community priorities.

• NPD will integrate bias-free policing principles into all levels of the organization, including comprehensive training of officers and supervisors.

• NPD will reform use of force policies, including requirements for using de-escalation techniques whenever possible and appropriate, prohibiting retaliatory force and ensuring mandatory reporting and investigation standards following use of force.

• NPD will deploy in-car and body-worn cameras to promote accountability, instill community confidence and improve law enforcement records.

• NPD will implement measures to prevent theft of property by officers, including robust reporting and complete accounting of property or evidenced seized.

• Office of Professional Standards investigators will be appropriately qualified and trained.  Investigations of civilian complaints will be conducted in an objective, thorough and timely manner.

• Newark will create a civilian oversight entity to give voice to and pursue concerns of its residents.

• NPD will develop protocols for conducting compliance reviews and integrity audits.

• NPD will implement steps to ensure that the disciplinary process is fair and consistent.

• NPD will improve records management and early intervention systems and collect data on all uses of force and investigatory stops, searches and arrests, and develop a protocol for the comprehensive analysis of the data.The information will be publicly reported.

• NPD will strengthen its public information programs to ensure that members of the public are informed of NPD’s progress toward reform.

Newark and the Department of Justice have jointly proposed Peter Harvey to lead the team of experts that will monitor the city’s compliance with the agreement.  Harvey is a former New Jersey Attorney General, and has experience under a Justice Department consent decree in the New Jersey State Police Case.  He brings a deep understanding of issues specific to New Jersey and Newark and has direct experience overseeing organizational change and law enforcement reforms.  Harvey will be assisted by a variety of local and nationally-recognized experts who are all committed to ensuring effective and constitutional policing.

The investigation was conducted jointly by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office of the District of New Jersey.  For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.  For more information about the U.S. Attorney’s Office of the District of New Jersey, please visit http://www.justice.gov/usao/nj.  

TRENTON, N.J. - Two day traders today admitted participating in a multi-year insider trading scheme that made over $3.9 million in illicit profits by exploiting material information in violation of confidentiality agreements, U.S. Attorney Paul J. Fishman announced.

Ronald Chernin, 67, of Oak Park, California, and Steven Costantin, 55, of Farmingdale, New Jersey, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to separate informations charging them each with one count of conspiracy to commit securities fraud and one count of securities fraud.

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

Chernin and Costantin worked as day traders for Costantin’s brother-in-law, Steven Fishoff, 58, of Westlake Village, California. Between May 2010 and August 2013, Chernin, Costantin, and Fishoff, as well as a business associate referred to as “Trader A,” expressed interest in participating in numerous stocks offerings by publicly traded companies.

Chernin, Costantin, and other members of the day trading operation falsely characterized their trading entities as legitimate, full-service financial management firms with as much as $150 million in assets under management, in order to increase the likelihood that the investment bankers would solicit them to participate in the stock offerings.

Before providing confidential information concerning the companies or the terms of the proposed sales, the investment bankers first required that Chernin, Costantin, Fishoff, Trader A, and their associated trading entities, enter into confidentiality or “wall-crossing” agreements whereby they agreed not to disclose or trade on the inside information and were brought “over the wall” for the narrow purpose of determining whether to purchase the offered securities.

Instead, Chernin, Costantin, and Fishoff violated the confidentiality agreements by directly or indirectly tipping each other and others with the inside information concerning the stock offerings; short selling the issuers’ stock in anticipation of a drop in price when the stock offerings were disclosed to the public; and covering their short positions once the stock offerings were disclosed. Additionally, Fishoff tipped his friend, Paul Petrello, 54, of Boca Raton, Florida, and another friend identified in the documents as “CC-1.”

By trading on the nonpublic information, Chernin, Costantin, and their conspirators gained more than $3.9 million in illicit profits over the course of the three-year scheme. Chernin and Costantin shared 50 percent of their profits with Fishoff.

The conspiracy count to which Chernin and Costantin each pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. The securities fraud count carries a maximum potential penalty of 20 years in prison and a $5 million fine.  Chernin and Costantin are both scheduled for sentencing on July 7, 2016.

Petrello previously pleaded guilty to his role in the scheme and is scheduled for sentencing on May 25, 2016.  Fishoff has been indicted for his involvement in the insider trading scheme. The charges and allegations contained in the indictment are merely accusations, and Fishoff is presumed innocent unless and until proven guilty.

U.S. Attorney Fishman 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 pleas. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Sanjay Wadhwa.

The government is represented by Assistant U.S. Attorneys Shirley U. Emehelu and Nicholas P. Grippo of the Criminal Division of the U.S. Attorney’s Office in Newark, as well as Acting Chief Barbara Ward and Assistant U.S. Attorney Sarah Devlin of the Office’s Asset Forfeiture and Money Laundering Unit.

Today’s pleas are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov

Defense counsel:

Ronald Chernin – John P. Lacey, Esq., Roseland, NJ

Steven Costantin – Scott A. Resnik, Esq., New York, NY

NEWARK, N.J. –A Ringwood, New Jersey, man will appear in federal court today to face charges that he possessed 17 machine guns, which are illegal under federal law, U.S. Attorney Paul J. Fishman announced.

Mariusz Cebula, 36, is charged by complaint with knowingly possessing machine guns, which are defined as weapons that can shoot more than one shot automatically, without manual reloading, by a single function of the trigger. Cebula was arrested yesterday by federal agents and will appear this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.

According to the complaint:

On July 17, 2015, law enforcement officers arrived at Cebula’s residence to serve a temporary restraining order on Cebula. Law enforcement officers conducted a search of his residence in furtherance of the temporary restraining order, as well as pursuant to a search warrant and Cebula’s oral consent. The search revealed that Cebula was in possession of approximately 262 high capacity magazines for firearms, as well as dozens of other firearms components, ammunition, accessories and manufacturing tools.

Approximately 17 of the firearms and firearm components that Cebula possessed were later determined to be machine guns under federal law.  Of the 17 machine guns recovered from Cebula’s residence, some were found to be operational as automatic weapons, including, but not limited to, the following:

1. A 9mm Lugar caliber, STEN Mk II type firearm, assembled using a machine gun receiver of unknown origin and original STEN-type machinegun parts, bearing a mark of identification of “86939,” but bearing no serial number.

2. A C.G. Haenel 9mm caliber, MP-41 select-fire machine gun, bearing serial number 2108.

Cebula was also found to be in possession of two short-barreled rifles and one silencer.

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

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), under the direction of Special Agent in Charge George P. Belsky, and the Ringwood Police Department, under the direction of Chief Joseph Walker, with the investigation leading to the charge. He also thanked the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes, for its role in the case.

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

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

Defense Counsel: Miles Feinstein Esq., Clifton, N.J.

TRENTON, N.J. – Two Brooklyn, New York, men were sentenced to prison today for fraudulently obtaining more than $250,000 through an elaborate “double-dipping” scheme that they committed at various Home Depot locations throughout the United States, including New Jersey, U.S. Attorney Paul J. Fishman announced.

Renauld Medard, 75, and Wesly Dieudonne, 31, were sentenced to 30 and 28 months in prison, respectively. They were previously convicted on all counts of an indictment charging them with one count of conspiracy to commit wire fraud and four counts of wire fraud. They were convicted following a four-day trial before U.S. District Judge Anne E. Thompson, who imposed the sentences today in Trenton federal court.

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

As part of the scheme, Medard and Dieudonne purchased various items from Home Depot locations in New Jersey, New York, Maryland, Connecticut and Pennsylvania using cash, credit cards or store credit. Medard and Dieudonne also went to Home Depot stores and compiled identical sets of goods as listed in receipts from previous purchases. Under the guise that they had forgotten to purchase an item, usually an inexpensive one, they used receipts from previous purchases to deceive cashiers into believing that the new sets of goods had already been bought.

Medard and Dieudonne also went to Home Depot to return items stolen in the scheme. In some instances, they presented a receipt in order to effectuate the return. In other instances, they obtained a refund for store credit without presenting a receipt. From July 2009 through November 2011, Medard and Dieudonne fraudulently obtained Home Depot store credit and refunds totaling over $250,000.

In addition to the prison terms, Judge Thompson ordered Medard to serve three years of supervised release and pay $260,477.79 in restitution. Dieudonne was ordered to serve three years of supervised release and pay $197,632.79 in restitution.

U.S. Attorney Fishman credited special agents of the U.S. Secret Service, under the direction of Acting Special Agent in Charge Jeffrey Wood in Newark, with the investigation.

The government is represented by Assistant U.S. Attorneys David M. Eskew and Andrew D. Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

Defense counsel:

Medard: Robert John Haney Esq., Princeton, New Jersey

Dieudonne: Andrea Bergman Esq., Trenton

TRENTON, N.J. – A Branchburg, New Jersey, man appeared in federal court today to face charges for his alleged role in a conspiracy to produce sexually explicit images of children through a website he operated from his home computer, U.S. Attorney Paul J. Fishman announced.

Jonathan Soto, 26, was arraigned this morning before U.S. District Judge Freda L. Wolfson in Trenton federal court and pleaded not guilty to both counts of an indictment charging him with conspiracy to produce child pornography and possession of child pornography. He was previously arrested and charged by federal complaint on April 16, 2015, and remains in federal custody pending the charges.

According to the indictment:

From July 2014 through April 2015, Soto administered and operated a website designed to produce child pornography by tricking minor victims into engaging in sexually explicit activity on web cameras. Users of the website created false profiles on popular social media websites purporting to be young children, aged from about 10 to 16.

Using these false profiles, the users chatted with actual minor children and lured the minor victims to other websites to engage in private chats. Once in a private chat room, users then persuaded child victims to engage in sexually explicit activity. Unbeknownst to the victims, when they engaged in sexually explicit activity, they were secretly recorded, and those videos were shared with other users on Soto’s website.

FBI special agents executed a search warrant at Soto’s residence on or about April 15, 2015, and discovered computer equipment containing multiple videos of child pornography which had been downloaded from Soto’s website.

The conspiracy to produce child pornography count carries a minimum penalty of fifteen years in prison, a maximum potential penalty of thirty years in prison, and a $250,000 fine. The possession of child pornography count carries a maximum potential penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and the Branchburg Township Police Department, under the direction of Chief David Young, with the investigation.

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

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

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

NEWARK, N.J. – A federal grand jury today indicted the owner of a registered broker-dealer in New York for orchestrating a stock market manipulation scheme that artificially inflated the stock price of two publicly traded companies, U.S. Attorney Paul J. Fishman announced. 

Guy Gentile, 39, of Putnam Valley, New York, is charged by indictment with one count of conspiracy to commit securities fraud and one count of securities fraud.    

According to the indictment:

From April 2007 through June 2008, Gentile and others allegedly engaged in an extensive “pump-and-dump” stock manipulation scheme to fraudulently inflate the prices of shares of certain companies in order to later sell those shares at artificially inflated prices. Gentile was the founder and owner of a registered broker-dealer based in New York. The scheme involved two public companies: Raven Gold Corporation (RVNG) and Kentucky USA Energy Inc. (KYUS).

Gentile and his conspirators first obtained control over large blocks of the free trading shares of the two target companies. They allegedly “pumped” the price of those shares by engaging in manipulative trading of the stocks and disseminating misleading promotional materials touting the stocks and encouraging others to purchase them. After pumping the stocks, Gentile and his conspirators “dumped” them, selling large volumes of the stock to investors. The companies’ stock prices then dropped, causing the victims of the scheme to suffer losses. The alleged stock manipulation scheme generated approximately $17.2 million in gross trading proceeds.    

The conspiracy count with which Gentile is charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities fraud count carries a maximum potential penalty of 20 years in prison and a $5 million fine.

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

The U.S. Securities and Exchange Commission (SEC) is filing a civil complaint against Gentile today.

On May 27 and 28, 2015, Itamar Cohen, 53, and Michael Taxon, 52, stock promoters from Ontario, Canada, each pleaded guilty before U.S. District Judge Jose L. Linares to one-count informations charging them with conspiracy to commit securities fraud for their involvement in the scheme.

U.S. Attorney Fishman 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 indictment. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Andrew Calamari, for its assistance in this matter.

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

Defense counsel: Joseph Tacopina Esq. and Chad Siegel Esq., New York

NEWARK, N.J. -  A New York man today admitted executing a more than two-year scheme in which he defrauded multiple victims who believed they were investing in businesses  that offered a popular fitness training program, U.S. Attorney Paul J. Fishman announced.

Joshua Bryce Newman, 36, pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to an information charging him with one count of wire fraud.    

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

Newman was a self-styled entrepreneur who engaged in a variety of business ventures, including venture capital work, a film production company, and, more recently, in businesses offering a popular fitness training program.  By 2011 and 2012, Newman found himself with mounting legal and financial troubles largely as a result of judgments and liens filed against him and his film production company, Cyan Pictures, relating to their failed film project that was meant to produce and distribute a film about the New York Yankees entitled “Keeper of the Pinstripes.” 

From 2012, Newman made material misrepresentations to solicit investments and loans purportedly for various fitness business ventures he was working on, when his true intent was to use the money for his own purposes, including repaying others who had invested in one of his prior projects. 

Newman often supplied his victims with doctored or bogus documentation in order to obtain the investment capital and loans.  He then lulled his victims into believing that their investment money was safe or that he was in a position to repay their loans by making further misrepresentations and supplying them with additional phony documents.  The false documents he used included doctored operating agreements, false statements of ownership percentages held by various individuals, and bogus Schedule K-1s purporting to show the amount of annual partnership gains or losses reported to the IRS. 

Newman also misrepresented to his potential partners, purported investors, and lenders in one of his business ventures that he had raised millions of dollars in funding for the project, when he knew that no such funds had been raised. 

When investors raised concerns about their investments, Newman typically gave them false assurances and agreed to return the funds.  In reality, he often had no funds to return, and so he would make various excuses, including that he had sent wires that had been delayed in the banking system, when no such wire had been sent.  He often stalled for time by giving his victims checks drawn on accounts with insufficient funds to cover the amount of the checks. 

On at least one occasion, Newman sent a picture of the purported wire transfer order for $165,000 to an investor who had threatened legal action and told the investor that the funds were on the way, even though Newman knew that no such funds had been or would be furnished to the investor.  

The information filed today alleges that Newman defrauded approximately 30 victims of approximately $3.1 million.

The wire fraud count to which Newman pleaded guilty carries a maximum potential sentence of 20 years in prison and $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for July 19, 2016.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s plea. 

The government is represented by Assistant U.S. Attorney Paul A. Murphy, Chief of the U.S. Attorney’s Office’s Economic Crimes Unit.

Defense counsel: Priya Chaudhry Esq., New York; Eric Kanefsky Esq., Newark

TRENTON, N.J. -  A Mercer County, New Jersey, man was sentenced today to 188 months in prison for committing four armed robberies of commercial establishments in Mercer county, U.S. Attorney Paul J. Fishman announced.

Samuel Matias Cruz, 36, formerly of Trenton, New Jersey, previously pleaded guilty to an information charging him with one count of conspiracy to commit Hobbs Act robberies.  U.S. District Judge Michael A. Shipp imposed the sentence today in Trenton federal court. 

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

Between September 2012 and March 2013, Cruz and his conspirators planned and executed a number of violent armed robberies of various commercial establishments in the Trenton area, including gas stations, restaurants, travel agencies and money-remitting businesses.  In several robberies, Cruz and others brandished firearms and physically restrained victims with plastic zip ties before absconding with large quantities of money taken from the respective establishments’ cash drawers and registers. 

On one occasion in December 2012, Cruz and two conspirators robbed the Sabor Latino Bar in Trenton.  During this robbery, the men held five individuals who were then present in the bar at gunpoint and subsequently restrained them by tying their hands with plastic zip ties.  Cruz and the other conspirators then stole approximately $12,000 from the bar’s cash register, as well as approximately $2,000 in cash and jewelry from the bar’s patrons.

Subsequently, on Dec. 29, 2012, Cruz helped plan and execute the robbery of the Woodrow Wilson Service Plaza Sunoco Gas Station on the New Jersey Turnpike, located in Hamilton Township, New Jersey. During that robbery, Cruz and another conspirator entered the station carrying handguns and physically restrained a Sunoco employee with plastic zip ties. The men stole approximately $26,000 from the station’s cash register before fleeing the location.

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

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), under the direction of Special Agent in Charge George P. Belsky; the Mercer County Prosecutor’s Office, under the direction of Acting Prosecutor Angelo J. Onofri; and the Burlington County Prosecutor’s Office, under the direction of Prosecutor Robert D. Bernardi, with the investigation leading to today’s sentencing. He also thanked officers from the N.J. State Police, under the direction of Col. Rick Fuentes, the Trenton Police Department, under the direction of Director Ernest Parrey, Jr., and the Westampton Police Department, under the direction of Police Chief Joseph Otto, for their roles in the case.

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

Defense counsel: Adalgiza A. Nunez, Newark, NJ

NEWARK, N.J. – A Monroe, New York, man, was charged today with accepting a $75,000 bribe for his assistance in securing a contract between a metallurgical technology company and his employer, a medical device company in New Jersey, U.S. Attorney Paul J. Fishman announced.

Daniel Lawyrnowicz, 46, is charged by complaint with violating the Federal Travel Act for accepting $75,000 from the technology Company in consideration for his assistance in obtaining the contract. Lawyrnowicz is expected to appear later today before U.S. Magistrate Judge James B. Clark III in Newark federal court.

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

On Dec. 22, 2015, an individual representing the technology company made a consensually recorded call to Lawyrnowicz during which the representative said he was nervous about a purported upcoming government audit of his company, and he raised concerns about the $75,000 payment to Lawyrnowicz.

Representative: “I am more worried about that 75k in cash that eh you know that we gave you, I don’t know if that ever comes up, or we deny it right, obviously.”

Lawrynowicz: “Yeah, yeah . . . when is that happening?”

Representative: “It’s ongoing, they called us to say they are auditing us and they just showed up. . .”

Lawrynowicz: “Let’s get a story together so that ah you know it all has legs and a tail.”

The count of violating the Federal Travel Act carries a maximum potential punishment of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater.

U.S. Attorney Fishman 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 charge.

The government is represented by Assistant U.S. Attorney Danielle M. Corcione of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

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

U.S. Attorney Fishman reorganized the health care fraud practice at the U.S. Attorney’s Office of the District of New Jersey, including creating a stand-alone Health Care and Government Fraud Unit, which handles both criminal and civil investigations and prosecutions of health care fraud offenses.  Since 2010, the office has recovered more than $1.29 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: Peter Till Esq., Springfield, New Jersey

CAMDEN, N.J. – The former general counsel of VO Financial Corp. today admitted conspiring to obstruct justice in a federal criminal case tried in 2013, U.S. Attorney Paul J. Fishman announced.

Joshua L. Gayl, 36, of Lafayette Hill, Pennsylvania, pleaded guilty before U.S. District Judge Noel L. Hillman in Camden federal court to an information charging him with one count of conspiracy to obstruct justice.

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

Adam and Ashley Lacerda, Ian Resnick, and several others were charged in April 2012 with conspiracy to commit mail and wire fraud based on their actions at the Vacation Ownership Group, which offered phony consulting services to owners of timeshares. After they were charged, the VO Group became VO Financial, and Gayl was hired as general counsel. The Lacerdas continued to run VO Financial through their July 2013 criminal trial. 

Gayl admitted misleading a witness, identified as “Victim 1,” after he learned that Victim 1 had told the FBI about being defrauded by the VO Group. Gayl contacted Victim 1 intending to obtain statements favoring the defense in the criminal case, but he concealed his true intentions from Victim 1. Instead, he wrote Victim 1 offering assistance if Victim 1 would tell him what Victim 1 told the FBI. Gayl and an accomplice then called Victim 1 and misleadingly said that they were recording the call for quality assurance and training purposes, when in fact they were trying to get Victim 1 on tape making statements favorable to the defense. Victim 1 told Gayl that the VO Group had promised to sell Victim 1’s timeshare, a VO Group misrepresentation alleged in the indictment. Gayl omitted this allegation when he told Victim 1 what was alleged in the criminal case. Although he did not know what the VO Group representative actually told Victim 1, Gayl told Victim 1 that “we do not sell timeshares” and that Victim 1 had some “confusion” in recalling a promise to sell Victim 1’s timeshare. Gayl ended the call and consulted with Adam Lacerda. Gayl then called Victim 1 back at Lacerda’s request to persuade Victim 1 that Victim 1’s recollection was mistaken – but Gayl did not tell Victim 1 that his purpose was to get recorded statements to help the criminal defense. Gayl told Victim 1 in the second call that it was “likely” and “logical” that Victim 1 had misunderstood that the VO Group sold timeshares.

Gayl also helped the defendants send potential trial witnesses payments intended to influence their testimony. Adam and Ashley Lacerda wanted these refunds paid to help the defense case at trial and make the recipients testify more favorably to the defense, but Gayl did not tell the potential witnesses that these were the purposes of the payments. Gayl wrote a letter urging “Victim 2” to take a refund, knowing that Resnick wanted Victim 2 to take the refund because Victim 2 was a potential trial witness against Resnick. A month before trial, Gayl wrote letters offering refunds to “Victim 3” and “Victim 4,” but failed to tell them that they were being offered refunds because they were potential trial witnesses.

Gayl also lied in responding to a trial subpoena asking VO Financial to produce records.  After Adam Lacerda’s criminal lawyer told the U.S. Attorney’s Office and Gayl that he had advised Lacerda not to be involved in the subpoena response, Gayl told Adam Lacerda about one subpoenaed recording harmful to the defense and saw Lacerda access the recording.  Lacerda deleted the damaging portion of the recording. When Gayl gave the U.S. Attorney VO Financial’s response to the subpoena, he included the altered recording and a false certification that he did not consult with Lacerda about the subpoena response. Gayl subsequently listened to the recording and realized that Lacerda had altered it.

Adam Lacerda, Ashley Lacerda, and Ian Resnick were convicted of conspiracy to commit mail and wire fraud and other offenses. Adam Lacerda was sentenced to 27 years in prison; one factor in his sentence was his involvement in what the court called a “comprehensive, calculated, and targeted effort at obstruction of justice.” Ashley Lacerda and Ian Resnick have yet to be sentenced.

The defendant faces a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the gain or loss caused by the offense.  Sentencing is currently scheduled for Sept. 2, 2016.

U.S. Attorney Fishman credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Jonathan Mellone, New York Region, for the investigation leading to today’s guilty plea.

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

Defense counsel:  Ellen C. Brotman, Esq., Philadelphia

TRENTON, N.J. – Two New Jersey men who were partners in a 29-month drug distribution conspiracy involving cocaine, marijuana, ecstasy and methylone were each sentenced to more than 18 years in prison, U.S. Attorney Paul J. Fishman announced.

Christopher Castelluzzo, 31, of Bayonne, New Jersey, was sentenced today to 240 months in prison. Luke Atwell, 34, of Hamilton, New Jersey, was sentenced yesterday to 220 months in prison. Both defendants were convicted of conspiracy to distribute or possess with intent to distribute methylone, cocaine, MDMA, and marijuana following a two-week trial before U.S. District Judge Freda L. Wolfson, who imposed the sentences in Trenton federal court.

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

Atwell and Castelluzzo were partners in a drug dealing conspiracy that spanned 29 months. In March 2013, the Drug Enforcement Administration (DEA) conducted an investigation resulting in the seizure of more than six kilograms of methylone at a drug mill in East Orange, New Jersey, that was tied to Atwell and Castelluzzo.

About a month later, in April 2013, agents of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), seized 2.9 kilograms of methylone that Atwell intended to pick up at the Manville, New Jersey, Post Office. Agents replaced the package with a dummy package, which Atwell picked up and placed in the car he occupied with Castelluzzo. Following the arrest of both defendants outside the Manville Post Office, agents searched various electronic devices of the defendants and uncovered email communications establishing a drug distribution conspiracy dating back to 2010.

In addition to the prison terms, Judge Wolfson sentenced both Atwell and Castelluzzo to three years of supervised release.

U.S. Attorney Fishman credited special agents of HSI, under the direction of Special Agent in Charge Terence S. Opiola, and special agents of the DEA, New Jersey Division, under the direction of Special Agent in Charge Carl J. Kotowski, for the investigation.

Defense counsel:

Castelluzzo: Dawn M. Florio Esq., New York

Atwell: Pasquale F. Giannetta Esq., Wayne

NEWARK, N.J. - The owner of a home health agency was sentenced today to 60 months in prison for her role in a $7 million scheme to defraud Medicaid and engage in bribery, money laundering, and tax evasion, U.S. Attorney Paul J. Fishman announced. 

Irina Krutoyarsky, 62, of Springfield, New Jersey, previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging her with conspiracy to commit health care fraud, bribery, conspiracy to commit money laundering, and tax evasion. Judge Hayden imposed the sentence today in Newark federal court.

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

Krutoyarsky owned HHCH Health Care Inc., of Linden, New Jersey, which provided home health aides and health care services to New Jersey residents. Home health aides visit patients at their homes and provide a variety of health care services, such as assistance with eating, dressing, and grooming. These home health aide services were subsidized under the N.J. Medical Assistance Program (Medicaid).

Krutoyarsky and her conspirators defrauded Medicaid by submitting false documents to the N.J. Board of Nursing, the state agency responsible for issuing home health aide certifications. Krutoyarsky falsely represented that prospective home health aides had attended and satisfactorily completed required training and testing. In truth, Krutoyarsky charged prospective home health aides hundreds of dollars for fraudulently obtaining their certifications.   

Krutoyarsky also fraudulently billed Medicaid for services not actually rendered to patients. Numerous HHCH home health aides routinely falsified records that claimed they had visited patients and provided them health care services. These home health aides had other jobs, were on vacations overseas, or were in other parts of the state during the times they claimed they were with patients. Home health aides sometimes gave cash kickbacks to patients who were also participating in the scheme. Federal agents introduced a cooperating witness (CW), posing as a prospective home health aide to Krutoyarsky. During one meeting in January 2012, Krutoyarsky and another conspirator meet with the CW to discuss having him join the scheme to defraud Medicaid. In explaining the scheme, Krutoyarsky explained that they would fraudulently bill Medicaid to obtain “free money [from the] Government.”

Krutoyarsky hired individuals with no home health certifications and no status in the country and then sent them to patients’ homes. Krutoyarsky and her conspirators then billed Medicaid, fraudulently claiming that the services had been provided by duly certified home health aides. 

Krutoyarsky defrauded Medicaid out of $7 million. She directed certain home health aides to establish checking accounts at a bank near HHCH’s office and then took control of their checkbooks.  After Medicaid paid the claims and transferred the funds into HHCH accounts, Krutoyarsky then transferred portions of the money into the aides’ accounts and used the money to purchase, maintain, and pay for real property in New Jersey, New York, Florida; purchase personal property for her own use and benefit; and pay for personal expenses for her own use and benefit and the use and benefit of her family.

Krutoyarsky also bribed an employee of the N.J. Department of Labor (NJDOL), who was working in an undercover capacity with federal agents. In mid-2010, the NJDOL received a complaint that Krutoyarsky was not paying overtime wages to her employees and commenced an investigation. The department demanded Krutoyarsky produce certain HHCH records. Realizing that providing these records would reveal the Medicaid fraud scheme, Krutoyarsky paid approximately $10,000 in a cash bribe to the employee for the purpose of obstructing and unlawfully influencing the NJDOL investigation. The employee, however, was wearing a recording device and recorded Krutoyarsky making the bribe payment on video.

In May 2011, Krutoyarsky paid a second cash bribe of approximately $15,000 to the employee for the purpose of obstructing and unlawfully influencing a second NJDOL investigation related to one of Krutoyarsky’s conspirator’s companies. This bribe payment was also captured on video.  

Between 2007 and 2011, Krutoyarsky cheated the IRS out of $907,150 in taxes due and owing to the United States. She sent home health aides to the homes of patients who were not eligible for Medicaid. These patients wrote checks payable to HHCH. A conspirator cashed these checks at check-cashing businesses in New Jersey and equally divided the cash with Krutoyarsky. Krutoyarsky also issued HHCH checks to “no show” employees, who then wrote personal checks back to Krutoyarsky. On her corporate tax returns, she falsely characterized these payments as legitimate business deductions, thus reducing her business’ corporate taxes.

In addition to the prison term, Judge Hayden sentenced Krutoyarsky to three years of supervised release, ordered her to pay $7 million in restitution and entered a forfeiture order for $7 million, including forfeiture of her home in New Jersey and properties in New York City and Florida.

U.S. Attorney Fishman credited special agents of the FBI, 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; U.S. Citizenship and Immigration Services; Acting N.J Attorney General Robert Lougy; Acting N.J. State Comptroller Philip James Degnan; Division Director Josh Lichtblau, Office of the State Comptroller, Medicaid Fraud Division; N.J. Division of Consumer Affairs, under the direction of Acting Director Steve C. Lee; the N.J. Board of Nursing; the N.J. Department of Labor, under the direction of Commissioner Harold J. Wirths; U.S. Department of State-Bureau of Diplomatic Security; and the Marlboro Police Department, under the direction of Chief Bruce Hall, for the investigation leading to today’s sentencing.

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

Today’s sentencing is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov

Defense counsel: Edward V. Sapone Esq., New York

NEWARK, N.J. – The owner of a group of freight payment, logistics, and shipping businesses headquartered in Branchburg, New Jersey, pleaded guilty today to wire fraud and money laundering, U.S. Attorney Paul J. Fishman announced.

Shirley Sooy, 65, currently of Fort Smith, Arkansas, pleaded before U.S. District Judge William Walls in Newark federal court to an information charging her with one count of wire fraud and one count of transacting in criminal proceeds.

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

From 2010 through April 2013, Sooy, through a collection of businesses operating under the umbrella of the “TransVantage Group,” entered contracts with corporate clients – referred to in a criminal complaint as the “victim companies.” TransVantage audited freight bills generated by common carriers and freight forwarders hired by the victim companies. TransVantage was obligated to pay the audited and approved freight bills to the carriers from funds provided by those companies, and the funds were supposed to be held in trust by TransVantage until paid over to the carriers. The victim companies also paid TransVantage for its purported auditing services, payments separate and apart from the carrier payment funds.

Sooy operated TransVantage as a Ponzi scheme, which resulted in substantial losses to the victim companies. Sooy and others comingled the funds from the victim companies – funds that were to have been paid to carriers – and then misused those funds in various ways. They paid unauthorized operating expenses and personal expenses.

The count of wire fraud to which Sooy pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of up to $250,000, or twice the gain or loss from the offense. The count of transacting in criminal proceeds with which Sooy is charged carries a maximum potential penalty of 10 years in prison and a fine of $250,000, or twice the gain or loss from the offense. Sentencing is scheduled for June 28, 2016.

U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Postal Inspector in Charge James Ball; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, for the investigation leading to today’s guilty plea.

The government is represented by Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office Economic Crimes Unit in Newark.           

Today’s arrest is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Defense counsel:  Michael J. Rogers Esq., Somerville, N.J.

NEWARK, N.J. - A Bergen County, New Jersey, woman today admitted embezzling  more than $1 million while she worked at a bank in Fort Lee, New Jersey, U.S. Attorney Paul J. Fishman announced.

Miye Chon, a/k/a/ “Karen Chon,” 36, of Englewood Cliffs, New Jersey, pleaded guilty before U.S. District Judge William H. Walls  to Count One, Count Two, and Count 29 of a superseding indictment charging her with bank fraud, embezzlement or misapplication of funds by a bank officer or employee, and aggravated identity theft.

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

Chon was employed by BankAsiana, a federally insured financial institution, as an operations officer and later as an assistant vice president and operations officer at the bank’s Fort Lee branch until the bank was acquired by Wilshire Bank in October 2013. Chon had access to customer accounts and the bank’s internal account records, computer system and vault. Over several years, Chon stole more than $1 million from BankAsiana’s customer accounts by regularly making unauthorized transfers from customer certificate of deposit (CD) accounts into BankAsiana’s vault cash account and then physically removing cash from the bank’s vault.

Chon accomplished this scheme on dozens of occasions, typically taking tens of thousands of dollars at a time. One time, she converted $100,000 from a customer’s CD account. As part of the scheme, Chon also opened up a bank account in an individual’s name and forged checks using that individual’s name without permission.

For the bank fraud and embezzlement charges, Chon faces a maximum potential sentence of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense, as well as mandatory restitution in the full amount of the loss to the victim bank. Chon also faces a two-year mandatory sentence on the aggravated identity theft charge that must be served consecutive to any other term of imprisonment, as well as a $250,000 fine, or twice the gross gain or loss resulting from the offense. Sentencing is scheduled for June 29, 2016.

U.S. Attorney Fishman 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 plea.

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

Today’s plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov

Defense counsel: Matthew Jeon, Esq., Fort Lee                   

NEWARK, N.J. - An owner of a Bergen County, New Jersey, factoring company was arrested this morning on charges that he allegedly lied to FBI special agents about his efforts to sell fraudulent accounts receivable to another factoring company, U.S. Attorney Paul Fishman announced.

William Kirchgessner, 45, of Bloomingdale, New Jersey, was charged by complaint with one count of wire fraud and one count of making a false statement in an FBI investigation.  He is scheduled to appear this afternoon before U.S. Magistrate Judge James B. Clark III in Newark federal court.

According to the complaint:

Kirchgessner is an owner of a factoring business that purchases accounts receivable from transportation companies in return for short-term financing. In February 2016, Kirchgessner suspected that his company was being defrauded by a trucking company located in Georgia and contacted the FBI.

FBI special agents later told Kirchgessner that the trucking company was defrauding his factoring business and asked Kirchgessner to inform them if he was contacted by any other factoring business regarding the trucking company or if the trucking company wanted to move its accounts receivable to another business.

Instead, Kirchgessner took steps to sell the fraudulent accounts receivable to a second factoring company. Kirchgessner called a broker for the second factoring company in furtherance of the resale, made false statements to the broker promoting the trucking company, and signed the buyout agreement with the second factoring company.

Kirchgessner caused the second factoring company to send a wire transfer of more than $1.6 million as part of the buyout. During a phone conversation with FBI special agents on Feb. 23, 2016, Kirchgessner denied any knowledge of the second factoring company and concealed his personal involvement in the buyout.

The charge of wire fraud carries a maximum potential penalty of 20 years in prison. The charge of making a false statement carries a maximum potential penalty of five years in prison. Both charges carry a potential $250,000 fine, or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s arrest.

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

NEWARK, N.J. – A drug supplier for the Grape Street Crips street gang was sentenced today to 176 months in prison for his role in distributing large quantities of crack-cocaine in and around Newark, New Jersey, U.S. Attorney Paul J. Fishman announced.

Jihad Coles, a/k/a “Half Dead,” 31, of Newark, previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with one count of conspiracy to distribute 280 grams or more of crack-cocaine. Judge Salas imposed the sentence today in Newark federal court.

In May 2015, over the course of three weeks, 50 alleged members and associates of the Grape Street Crips were charged in criminal complaints that alleged drug-trafficking, physical assaults, and witness intimidation. The charges were the result of a long-running investigation led by the Drug Enforcement Administration (DEA) and the FBI, in conjunction with the Essex County Prosecutor’s Office, the Newark Police Department and Essex County Sheriff’s Office Bureau of Narcotics. Over the course of the entire investigation, 71 defendants have been charged with federal and state charges.

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

Coles admitted that between March 2012 and August 2012 he conspired with others to distribute hundreds of grams of crack-cocaine at the Mildred Terrell Homes public-housing complex located on Riverview Terrace in Newark, New Jersey. As a long-time member of the Grape Street Crips, Coles admitted that he served as an organizer and leader of the crack-cocaine distribution conspiracy.

In addition to the prison term, which will be served consecutively to a state prison term that he is currently serving, Coles was sentenced to five years of supervised release.

U.S. Attorney Fishman credited special agents of the DEA, under the direction of Special Agent in Charge Carl Kotowski, and special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher, for the investigation leading to today’s sentencing. He also thanked prosecutors and detectives of the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; police officers and detectives of the Newark Police Department, under the direction of Director Anthony Ambrose; and the Essex County Sheriff’s Office under the direction of Sheriff Armando B. Fontoura, for their work on the investigation.

The government is represented by Assistant U.S. Attorneys Osmar J. Benvenuto and Barry A. Kamar of the Criminal Division in Newark.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.

NEWARK, N.J. – Two Indian nationals were indicted by a federal grand jury today for allegedly smuggling foreign nationals into the United States via commercial airline flights, U.S. Attorney Paul J. Fishman announced.

Nileshkumar Patel, 41, and Harsad Mehta, 66, both of India, are each charged by indictment with one count of conspiracy to bring in and harbor aliens and one count of money laundering conspiracy. In addition, Patel is charged with six counts and Mehta is charged with four counts of smuggling foreign nationals into the United States for private financial gain. Patel and Mehta were arrested on Oct. 21, 2015 upon their arrival at Newark Liberty International and both remain detained pending the outcome of the charges.

According to the indictment:

Homeland Security Investigations (HSI)  received information that a smuggling operation run by Patel and Mehta was attempting to find methods to illegally smuggle foreign nationals from India into the United States. The investigation revealed that the smuggling operation recruited Indian nationals and others to pay fees in exchange for passage to the United States.

Beginning in April 2014, an undercover law enforcement officer posing as a smuggler began meeting with Patel and Mehta in Bangkok, Thailand. Patel and Mehta stated that they were involved in the smuggling business and had multiple Indian nationals that they were intending to smuggle into the United States. Mehta and Patel agreed to transport the Indian nationals from India to Thailand, at which point the undercover law enforcement officer would presumably use his contacts to smuggle the Indian nationals into the United States via commercial airline flights.

Patel and Mehta agreed to wire a $10,000 down payment for each individual to be smuggled into the United States and to pay a balance of tens of thousands of dollars for each individual once the foreign nationals arrived in the United States.

In total, Patel and Mehta arranged for six Indian nationals to be brought to Thailand for smuggling into the United States via Newark Liberty International Airport on three occasions.

The conspiracy to bring in and harbor aliens charge carries a maximum potential sentence of 10 years in prison. The money laundering conspiracy charge carries a maximum potential penalty of 20 years in prison. Each substantive charge of alien smuggling carries a maximum potential penalty of five years in prison and a mandatory minimum of three years in prison.

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

U.S. Attorney Fishman credited special agents of HSI, under the direction of Special Agent in Charge Terence S. Opiola, with the investigation leading to the charges.

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

Defense counsel:

Patel: Peter Carter Esq., Assistant Federal Public Defender, Newark

Mehta: Mark Berman Esq., River Edge, New Jersey

Galloway Township Man Arrested Today

CAMDEN, N.J. – Federal, state and local law enforcement authorities today arrested an Atlantic County, New Jersey, man in connection with a ring that allegedly trafficked heroin, powder cocaine and crack cocaine in the Atlantic City area, U.S. Attorney Paul J. Fishman announced.

TeJohn Cooper, 43, of Galloway Township, New Jersey, was arrested this morning following a pre-dawn raid by agents and officers of the FBI, Atlantic City and Ventnor police departments. He is charged in a superseding indictment with drug-trafficking conspiracy and using a telephone facility to further a drug-trafficking crime. Cooper is scheduled to have his initial court appearance today before U.S. Magistrate Judge Joel Schneider in Camden federal court.

Five other defendants charged in the initial indictment also were charged in the superseding indictment. The lead defendant, Toye Tutis, has been charged with two counts of possessing firearms and ammunition after previously having been convicted of a felony. Jazmin Vega, originally charged only with money laundering conspiracy, now also has been charged with drug-trafficking conspiracy. All six defendants were charged with one or more counts of using a telephone facility to further a drug-trafficking crime.

DEFENDANTS

Name

Age

Residence

Toye A. Tutis

42

Pleasantville, New Jersey

Ivan Joel Cuellar-Naranjo

28

Los Angeles, California

Tozine N. Tiller

40

Absecon, New Jersey

Kabaka Atiba

43

Atlantic City

TeJohn Cooper

43

Galloway Township

Jazmin S. Vega

40

Pleasantville

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

The defendants are allegedly members of a drug-trafficking organization that dealt in large quantities of heroin, powder cocaine, and crack cocaine in and around Atlantic City. They are charged with conspiracy to distribute more than five kilograms of cocaine, more than 280 grams of crack cocaine, and more than one kilogram of heroin.

Six other defendants previously pleaded guilty to participating in the conspiracy:

• Ronald Douglas Byrd, 51, of Pleasantville; sentencing to be scheduled;

• Kareem Taylor, 41, of Atlantic City; sentencing scheduled for June 2, 2016;

• Talib Tiller, 43, of Mays Landing, sentencing scheduled for March 18, 2016;

• John Wellman, 41, of Somers Point, sentencing scheduled for June 2, 2016;

• Phillip Horton, 50, of Los Angeles, California, sentencing scheduled for June 2, 2016; and

• Francisco Alberto Rascon-Muracami, 22, of Obregon, Mexico, sentenced on Oct. 30, 2015, to 70 months in prison and five years of supervised release.

The conspiracy count carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. The money laundering conspiracy count carries a maximum potential penalty of 20 years in prison and a $250,000 fine.  The telephone facilitation counts each carry a maximum potential penalty of four years in prison and a $250,000 fine. The felon-in-possession counts each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Andrew Campi; the Drug Enforcement Administration’s New Jersey Division, under the direction of Special Agent in Charge Carl J. Kotowski; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; and the Atlantic City Police Department, under the direction of Police Chief Henry White, with the investigation leading to today’s charges. 

He also thanked the N.J. State Police; the Atlantic County Sheriff’s Office; the Bureau of Alcohol, Tobacco and Firearms; U.S. Immigration and Customs Enforcement (ICE)-Homeland Security Investigation (HSI); U.S. Postal Inspection Service; Cumberland County Sheriff’s Office and the Ventnor, Northfield and Millville police departments for their assistance.

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

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

TRENTON, N.J. – An insurance salesman who was entrusted with managing his client’s inheritance was convicted by a federal jury today for fraudulently using the funds for his own benefit, U.S. Attorney Paul J. Fishman announced.

Patrick McCullagh, 67, of Georgetown, Kentucky, was convicted of an indictment charging him with one count of wire fraud. He was convicted following an eight-day trial before U.S. District Judge Mary L. Cooper in Trenton federal court. The jury deliberated for six hours before returning the guilty verdict.

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

McCullagh was the principle of MidAtlantic Regional Services Inc., a purported insurance company located in Bordentown, New Jersey. In 2001, the victim entrusted McCullagh with money that the victim had inherited from his mother after her death. McCullagh falsely told the victim that he would use the funds to invest in a manner that would preserve the principle while paying the victim back in interest.

Instead, McCullagh pocketed some of the funds directly and forged withdrawal requests so he could loot money from the victim’s investment accounts. In order to deceive the victim, McCullagh also had the victim’s account statements diverted from the victim’s address. In addition, the “interest” payments that McCullagh paid the victim on a monthly basis were actually funds McCullagh had siphoned from the investment accounts’ principle balance. McCullagh even fraudulently told the victim that some of the investments were tied-up in legal disputes surrounding a Kentucky property and that he needed money for legal fees, which the victim later provided. Altogether, McCullagh defrauded the victim out of more than $100,000.

The wire fraud charge of which McCullagh was convicted 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 set for July 6, 2016.

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

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

Defense counsel: James Patton Esq., Livingston, New Jersey

NEWARK, N.J. – A Somerset, New Jersey, man who was pulled over in an SUV with an air tank hiding 19 kilograms of cocaine and seven kilograms of heroin that he intended to distribute in the Jersey City, New Jersey, area was sentenced today to 70 months in prison, U.S. Attorney Paul J. Fishman announced.

Richard Vasquez Rodriguez, 35, previously pleaded guilty before U.S. District Judge Kevin McNulty to a superseding information charging him with one count of distribution and possession with intent to distribute cocaine and one count of distribution and possession with intent to distribute heroin. Judge McNulty imposed the sentence today in Newark federal court.

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

On Jan. 16, 2014, Rodriguez was driving a 2005 Blue Chevrolet Tahoe on the New Jersey Turnpike headed towards Jersey City. Law enforcement officers pulled over Rodriguez, and he consented to a search of the vehicle. 

Law enforcement found an air tank, similar to a helium tank for filling balloons, lying in the back of the Chevrolet Tahoe. Upon closer inspection, it appeared that one end of the air tank had been removed at some point and welded back together. A search of the air tank revealed that it contained approximately 19 kilograms of cocaine and seven kilograms of heroin. Rodriguez admitted that he transported the air tank with the intent to distribute the cocaine and heroin.

In addition to the prison term, Judge McNulty sentenced Rodriguez to three years of supervised release.

U.S. Attorney Fishman credited special agents of the Drug Enforcement Administration (DEA), New Jersey Division, under the direction of Special Agent in Charge Carl J. Kotowski, and officers of the N.J. State Police, under the direction of Col. Joseph R. Fuentes, superintendent of the state police, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Jacques S. Pierre, Joyce M. Malliet and Francisco J. Navarro of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Dennis D.S. McAlevy Esq., Union City, New Jersey

TRENTON, N.J. – A Somerset County, New Jersey, man today admitted possessing on his computer images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Cliff Ramsay, 30, of Raritan, New Jersey, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with one count of possession of child pornography.   

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

On Feb. 25, 2015, and Feb. 27, 2015, Ramsay – at the time a music teacher at a public middle school in Hunterdon County – accessed a website known to contain images, videos, and other material containing images of child sexual abuse. A search warrant was executed at Ramsay’s home on July 28, 2015, and numerous files containing child pornography were found on his computer.

The charge of possession of child pornography carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for July 6, 2016.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, with the investigation leading to today’s guilty plea. He also thanked the Somerset County Prosecutor’s Office, under the direction of Acting Prosecutor Michael H. Robertson; the Hunterdon County Prosecutor’s Office, under the direction of Anthony P. Kearns III; the Raritan Police Department, under the direction of Chief Kenneth McCormick; and the Readington Police Department, under the direction of Chief Sebastian Donaruma, for their assistance with this investigation.

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

Defense counsel: Joshua D. Altman Esq., Trenton

CAMDEN, N.J. – A Camden County, New Jersey, woman today admitted her role in defrauding the Federal Emergency Management Agency following Super Storm Sandy, U.S. Attorney Paul J. Fishman announced.

Andrea Knoerzer 53, of Voorhees, New Jersey, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging her with one count of disaster benefits fraud.

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

When a natural disaster or federal emergency occurs in the United States, federal agencies, such as FEMA, provide relief and assistance to affected individuals and entities.  FEMA provides financial assistance by, among other things, helping affected individuals repair their property.

Due to FEMA’s vast size and the typically large number of victims resulting from a disaster, FEMA frequently has been targeted in disaster fraud schemes by individuals or groups seeking money to which they were not entitled. These individuals accomplished their schemes by submitting fraudulent applications to FEMA for among other things, repairs and rental assistance.

In October 2012, the various counties of southern New Jersey, including Cape May County, suffered significant damage due to wind, rain, and flooding as a result of Hurricane Sandy. On Oct. 30, 2012, President Obama signed a Presidential Disaster Declaration for the State of New Jersey pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistant Act, enabling eligible individuals to seek financial assistance from FEMA when displaced by the storms.

Knoerzer admitted that she applied for FEMA benefits on Nov. 1, 2012. She claimed that her house in Ocean City was her primary residence, that the storm damaged it, and that it was unfit for occupancy.  She also claimed that the storm damaged her 2001 Volvo station wagon. In reality, Knoerzer’s primary residence was in Voorhees and her Volvo was not in Ocean City.  After FEMA awarded her temporary rental assistance, Knoerzer admitted that she submitted fraudulent documents to FEMA to secure continued disaster assistance through FEMA’s rental assistance program.  Knoerzer received $13,373 from FEMA’s emergency rental assistance funds and $7,500 for transportation assistance to which she was not entitled.

The charge to which Knoerzer pleaded guilty carries a maximum potential penalty of 30 years in prison and a fine of $250,000. Sentencing is scheduled for June 23, 2016.

U.S. Attorney Fishman credited special agents of the Department of Homeland Security, Office of Inspector General, under the direction of Special Agent in Charge Gregory Null, for investigation leading to today’s guilty plea.

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

Defense counsel: A. Charles Peruto Esq., Philadelphia

TRENTON, N.J. – The owner and president of a Camden County, New Jersey, payroll processing company was charged today with defrauding more than 50 clients – including the City of Trenton – out of more than $5.6 million, U.S. Attorney Paul J. Fishman announced.

John Scholtz, 67, of Winslow, New Jersey, was charged by complaint with wire fraud, fraud against a local government receiving federal funds, and money laundering.  He is scheduled to appear in court later today before U.S. Magistrate Judge Douglas E. Arpert.

According to the complaint:

Scholtz owned and operated Innovative Payroll Services LLC (IPS), a company that provided payroll services to clients in New Jersey and elsewhere. His clients included municipalities, educational institutions, and various small- to medium-sized, privately held companies. Each payroll period, IPS provided its clients with a payroll summary setting forth the payroll taxes owed for that period. IPS clients then deposited the specified payroll taxes into an IPS bank account, where IPS held the funds until they were remitted to the taxing authorities.

Starting at least in June 2015, Scholtz allegedly withdrew funds from that IPS account and used them to pay for his own expenses, including as a deposit on a $1.8 million house in Florida, credit card payments, investments in other businesses, and payments for cars, boats and airplanes.

Over time, this ongoing misappropriation of funds caused many IPS clients to be in delinquent status with the IRS and state and local taxing authorities. As clients’ tax deposit funds came in, IPS used such funds to pay other clients’ taxes owed for prior pay periods, as well as penalties and interest. As a result of the scheme, more than 50 IPS clients sustained over $5.6 million in losses based on federal tax deposits that IPS failed to make, as well as associated penalties and interest. The City of Trenton was an IPS client from July 2009 to January 2016 and is one of the IPS clients whose tax deposit funds were misappropriated by Scholtz.

The count of wire fraud with which Scholtz is charged carries a maximum potential penalty of 20 years in prison; the count of fraud against a local government receiving federal funds and the count of money laundering each carry a maximum penalty of 10 years in prison.  All three charges also carry a fine of $250,000 or twice the gross gain or loss from the offense.  

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and the Mercer County Prosecutor’s Office, under the direction of Acting Prosecutor Angelo Onofri, with the investigation leading to today’s charges.

The government is represented by Assistant U.S. Attorney Sarah M. Wolfe of the U.S. Attorney’s Office Criminal Division in Trenton.

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

Defense counsel: Lisa Mathewson Esq. of Philadelphia and Brian Reilly Esq., Assistant Federal Public Defender

NEWARK, N.J. – A lawyer who previously practiced in Jersey City, New Jersey, today admitted structuring approximately $200,000 in cash to avoid reporting requirements, U.S. Attorney Paul J. Fishman announced.

Magdy Fouad Anise, a/k/a “Michael Anise,” 52, of Aberdeen, New Jersey, pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to Count Two of an indictment charging him with structuring.

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

Anise was an attorney at Anise & Anise, Attorneys at Law, located in Jersey City. From 2009 through 2011, Anise received cash kickbacks from doctors and others in exchange for personal-injury client referrals. In lieu of cash, Anise asked a doctor who gave him kickbacks to pay him with gold bars, give money to Anise’s church and pay Anise’s mortgage.

Anise admitted that from 2009 through 2012, he made cash deposits into five different bank accounts that he controlled in amounts less than $10,000, the amount that would have triggered the filing of a currency transaction report (CTR) with the IRS.

CTRs require disclosure of the identity of the individual who conducted the transaction and the individual or organization for whom the transaction was completed. Many individuals involved in illegal activities are aware of these reporting requirements and take active steps to cause financial institutions not to file CTRs in order to avoid detection of the movement of large amounts of U.S. currency. These steps are referred to as “structuring” and involve making multiple cash deposits or withdrawals in amounts of $10,000 or less on the same day or consecutive days in order to avoid CTR filings.

The charge of structuring cash transactions to avoid reporting requirements carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 22, 2016.

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

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

Defense Counsel: Roy Greenman Esq., Union

NEWARK, N.J. – Two East Orange, New Jersey, men are charged today with filing false federal income tax returns on behalf of inmates at the Essex County Correctional Facility (“Essex County Jail”) in order to fraudulently obtain income tax refunds that were used to pay for bail, lawyers, and other expenses, U.S. Attorney Paul J. Fishman announced.

Reginald Eaford, 45, and Winfred Moses, 48, are each charged by complaint with one count of conspiracy to defraud the United States and one count of aggravated identity theft. Both defendants are currently in custody. Moses will appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor. Eaford will appear on a date yet to be determined.

According to the complaint:

Eaford was an inmate at the Essex County Jail from approximately May 20, 2013 through Feb. 12, 2014. Law enforcement became aware that during his incarceration, Eaford deposited unusually large amounts of money into his inmate account. 

Through a review of the recorded telephone calls and records maintained by the Essex County Jail, law enforcement officers learned that Eaford, Moses, and others conspired to obtain social security numbers, dates of birth, and other information from inmates at the Essex County Jail.  Eaford and Moses would then generate false W-2 forms indicating that the inmates had earned income during the relevant tax year and that federal income tax had been withheld from their paychecks. Eaford and Moses would then file false federal income tax returns on behalf of the inmates and refund checks would be sent to the Essex County Jail or to Moses’s East Orange residence. The proceeds of the fraud were split among Eaford, Moses, and the relevant inmates.

According to interviews conducted by law enforcement of current and/or former inmates at the Essex County Jail, the fraudulent tax proceeds were used by inmates to pay for bail, lawyers, or other needs.

For example, on Nov. 2, 2013, Eaford placed a telephone call from the Essex County Jail to Moses. The call was recorded by the Essex County Jail. During the call, Eaford and Moses discussed the refund status for a tax return filed using a social security number belonging to an inmate at the Essex County Jail (“Inmate 1”).  IRS records indicate that Inmate 1’s 2013 tax return was filed electronically on March 18, 2014 by an individual using an IP address registered at Moses’s residence. In addition, Inmate 1’s 2013 tax return included a bogus W-2 form that claimed that Inmate 1 had earned $70,021 in wages, even though he had not received any W-2 form from any employer that year.

From Jan. 28, 2014 to April 22, 2014, 60 tax returns were filed in the same manner using an IP address registered at Moses’s residence, for a total of $368,557 in fraudulently-obtained tax refunds. The majority of those fraudulent tax returns were for current or former inmates of the Essex County Jail. Of the 60 tax returns, 24 listed Moses’s residence as the taxpayer’s address and 59 of the 60 tax returns contained W-2 forms that did not match IRS records.

The conspiracy charge carries a maximum potential sentence of five years in prison. The aggravated identity theft charges carry a mandatory sentence of two years in prison that must be served consecutively to the punishment imposed on the conspiracy charge.

U.S. Attorney Fishman credited special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, postal inspectors from the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge J.R. Ball, and the Internal Affairs Division of Essex County Jail, under the leadership of Warden Roy Hendricks, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Francisco J. Navarro of the U.S. Attorney’s Office Criminal Division in Newark.

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

Defense counsel:        

Eaford: Assistant Federal Public Defender Lisa Mack Esq., Newark

Moses: Leigh-Anne Mulrey Esq., Morristown, New Jersey

NEWARK, N.J. – A Belleville, New Jersey, woman today admitted leading a conspiracy to illegally obtain and distribute oxycodone in New Jersey, U.S. Attorney Paul J. Fishman announced.

Victoria Horvath, 43, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an indictment charging her with conspiracy to distribute oxycodone.

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

Using confidential sources, physical surveillance, and recorded text messages and telephone calls, investigators with the Drug Enforcement Administration (DEA) discovered that members and suppliers of a drug trafficking organization secured prescriptions for oxycodone and other controlled substances from various doctors in New Jersey, filled them at pharmacies in Belleville and elsewhere, and sold the drugs for a profit. The investigation identified Victoria Horvath as a senior member of the drug trafficking organization.

Horvath admitted that, between Feb. 5, 2014 and Aug. 13, 2014, she personally went to various doctors’ offices and obtained prescriptions for pills containing oxycodone, had the prescriptions filled by various pharmacies, and sold the pills to members of the conspiracy and others. Horvath also drove other conspirators to specific doctors to obtain oxycodone prescriptions, assisted them in getting the prescriptions filled, and helped them sell the pills. 

For example, Horvath admitted that she, while working with multiple conspirators, sold 119 oxycodone pills to an undercover law enforcement officer in February 2014 in exchange for $2,020. Horvath also admitted to being an organizer and manager of the conspiracy.

Oxycodone is a Schedule II controlled substance – meaning that it has a high potential for abuse, a currently accepted medical use with severe restrictions, and abuse of the drug may lead to severe psychological or physical dependence.

The charge to which Horvath pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $1 million fine. Sentencing is scheduled for June 20, 2016.

Of the individuals originally charged with Horvath, Daniel Horvath, 27, Monica Horvath, 22, Johnny Horvath, 46, Tony Marco, 47, and Steven Horvath, 45, all of Rutherford, New Jersey, and Justin Farraj, 24, of Newark, New Jersey have pleaded guilty and await sentencing. Brian Perez, 23, was sentenced to a term of 40 months in prison in September 2014. Luis Rivera, 25, was sentenced to 54 months in prison in August 2015. Charges were dismissed against Belleville pharmacist Vincent Cozzarelli after his death in April 2014. The indictment remains pending against six other conspirators.

U.S. Attorney Fishman credited the DEA’s New Jersey Division, under the direction of Special Agent in Charge Carl J. Kotowski, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Sara F. Merin of the U.S. Attorney’s Office in Newark.

Defense counsel: Frank P. Arleo Esq., West Orange, New Jersey

NEWARK, N.J. – The chief executive officer of a publicly traded microcap company made his initial court appearance in San Francisco today on charges he allegedly filed false reports with the U.S. Securities and Exchange Commission and made false statements in press releases and blog posts, U.S. Attorney Paul J. Fishman announced.

Cary Lee Peterson, 36, of Texas and Arizona, is charged by complaint with two counts of false certification and one count of securities fraud. FBI agents arrested Peterson March 13, 2016, at San Francisco International Airport when he arrived on an international flight. He is scheduled to appear this afternoon before U.S. Magistrate Judge Joseph C. Spero in San Francisco federal court.

According to the complaint: 

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

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

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

• On Dec. 21, 2012, Peterson falsely certified on Form 10-Q for the quarter that ended Oct. 31, 2012 that RVPlus held $8,653,846 in short-term accounts receivable for services rendered under the Nigeria Agreement.He did so despite prior warnings from RVPlus’ auditors that reporting these receivables as revenue was improper;

• On Dec. 27, 2012, Peterson falsely certified on SEC Form 8-K that RVPlus had entered into a contract worth $10.5 million with the Federal Ministry of Planning & Economic Affairs for the Republic of Liberia (the “Liberia Agreement”);

• On March 28, 2013, Peterson falsely certified on SEC Form 10-Q for the quarter that ended on Jan. 31, 2013, that RVPlus held $17,590,837 in short-term accounts receivable from, among other sources, the Haiti and Liberia agreements.

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

In addition to the false SEC reports, Peterson also published false and misleading press releases and drafted blog posts under a phony name in which he touted the benefits of the Nigeria, Haiti, and Liberia agreements. 

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

Each count with which Peterson is charged carries a maximum penalty of 20 years in prison and a maximum fine of $5 million. The SEC also filed a civil complaint against Peterson today in New Jersey federal court in Newark alleging multiple counts of securities fraud. 

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, with the investigation leading to today’s charges.  Mr. Fishman thanked special agents of the FBI, under the direction of Special Agent in Charge David J. Johnson, in San Francisco, and for their assistance with Mr. Peterson’s arrest.  He also thanked the Securities and Exchange Commission New York Regional office under the direction of Andrew M. Calamari, Regional Director. 

The government is represented by Assistant U.S. Attorney Jonathan M. Peck of the U.S. Attorney’s Office General Crimes Unit in Newark and Assistant U.S. Attorney Lloyd Farnham in San Francisco.

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

NEWARK, N.J. – A family physician with offices in Cresskill and Little Falls, New Jersey, was sentenced today to 37 months in prison for defrauding Medicare, Medicaid and private insurance companies out $280,000 by billing them for non-existent office visits, U.S. Attorney Paul J. Fishman announced.

Albert Ades, 61, of Englewood, New Jersey, previously pleaded guilty before U.S. District Judge Esther Salas to Count One of an indictment charging him with health care fraud. Judge Salas imposed the sentence today in Newark federal court.

According to the documents filed and statements made in court:

From 2005 through June 2014, Ades, a licensed family medicine doctor who owns and operates Albert Ades M.D., P.A., fraudulently billed Medicare, Medicaid and various private payors for face-to-face physician office visits that never happened. Ades wrote prescriptions, authorized refills or performed other tasks without ever seeing those patients on the billed dates. Ades admitted that he altered patients’ medical charts by inserting fabricated blood pressure readings, other vitals and clinical notes on patients’ charts to make it appear as if they had visited Ades’s office on the billed dates.  

Ades admitted that, between 2009 and 2013, his scheme caused a loss of approximately $280,000 to federal health care benefit programs and private insurers.

In addition to the prison term, Judge Salas sentenced Ades to three years of supervised release and ordered him to forfeit $280,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and investigators with the U.S. Attorney’s Office with the investigation leading to today’s sentencing. U.S. Attorney Fishman also thanked the National Insurance Crime Bureau for their assistance with the investigation.

The government is represented by Assistant U.S. Attorneys Jane H. Yoon and Danielle M. Corcione of the U.S. Attorney’s Health Care and Government Fraud Unit in Newark.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $1.29 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: Alexander Spiro Esq., New York 

NEWARK, N.J. – An Elmont, New York, woman was arrested today for allegedly orchestrating a multi-pronged H-1B visa fraud scheme through her shell Newark-based company, Care Worldwide (CWW), U.S. Attorney Paul J. Fishman announced.

Raina Massey, 51, is charged by complaint with two counts of wire fraud, one count of visa fraud, and one count of aggravated identity theft.  She is scheduled to appear this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.

According to the complaint:

Non-United States citizens must have some kind of authorization to work legally in this country.  H-1B visas are non-immigrant visas designed to allow U.S.-based employers to recruit and employ non-U.S. citizen professionals.  H-1B visas are employer, not employee, driven, and are only issued for a specified, limited duration for “specialty occupations.” 

Foreign workers admitted under the H-1B program are known as “beneficiaries” of the visas. To obtain an H-1B visa, an employer has to apply on behalf of the beneficiary and complete various forms required for the visa to be approved. One of those forms is U.S. Department of Homeland Security, U.S. Citizenship and Immigration Services Form I-797C, which is used to memorialize, among other things, that an application for an H-1B visa has been successfully filed on behalf of an H-1B beneficiary and that the application has been vetted by the U.S. government. Beneficiaries do not have to pay any fees in connection with the visa application and are not responsible for finding their own employment.

From February 2012 through March 2015, Massey and others executed the fraud scheme through her company, CWW, which purported to be a clinical research company, but was actually a shell company that did little to no legitimate work of any kind. Massey and others sought out and advertised for qualified foreign professionals, purportedly to work for CWW in clinical research positions as beneficiaries of H-1B visas. These beneficiaries became victims of the scheme because the advertised positions did not actually exist.

For one set of victims, Massey engaged in “benching,” a form of fraud in which Massey and others falsely represented that the beneficiaries would have specialty technical jobs waiting for them upon their arrival at CWW. After taking illegal payments from these beneficiaries, Massey and others then completed applications for H-1B visas for these beneficiaries. However, when the beneficiaries arrived in the United States, Massey and others employed them in menial tasks, such as handing out flyers on street corners.

For a second set of victims, Massey and others, after illegally taking payments from the victims, never actually applied for H-1B visas. Massey and others provided these victims with false and fraudulent Form I-797Cs, which contained receipt numbers from other, previously filed, H-1B visa applications.

For a third set of victims, Massey and others, after illegally taking payments from the victims based on fraudulent representations regarding H-1B visas, never provided any documentation whatsoever to the victims.

In all cases, Massey and others demanded and took illegal payments from victims in exchange for purportedly filing H-1B visa applications on behalf of the victims.

Each wire fraud count carries a maximum penalty of 20 years in prison; the visa fraud count carries a maximum penalty of 10 years in prison; and the aggravated identity theft count carries a mandatory sentence of two years in prison, to run consecutive to any sentence imposed on any other count. Each count carries a potential fine of up to $250,000, or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited special agents of the U.S. Department of State, under the direction of Special Agent in Charge David Schnorbus of the New York Field Office, and investigators from the U.S. Attorney’s Office, under the direction of Supervisory Criminal Investigator Thomas Mahoney, for the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney Zach Intrater, Chief of the Criminal Division’s General Crimes Unit.

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

TRENTON N.J. – A Mercer County, New Jersey, man is scheduled to make his initial court appearance today on charges that he distributed images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Christopher Walsh, 31, of Yardville, New Jersey, a school bus driver, was arrested on the evening of March 10, 2016, and charged by complaint with three counts of distributing images or video files containing child pornography via e-mail.  He is due to appear later today before U.S. Magistrate Judge Douglas E. Arpert in Trenton federal court.

According to the criminal complaint:

From June 15, 2014, to Jan. 10, 2016, Walsh’s e-mail account either sent or received 1,590 files that contained images of child sexual abuse. On Oct. 19, 2014, Walsh e-mailed another person an image depicting child sexual abuse, stating that Walsh himself was depicted in the image.  From July 30, 2015, to Aug. 2, 2015, Walsh exchanged e-mails with another email user in which he stated that he liked young children, that he was babysitting for particular children of whom he hoped to get photographs and with whom he hoped to “play,” and that one of the children had Down’s syndrome. During the exchange, Walsh sent a video depicting child sexual abuse to the other user. 

Walsh also sent additional videos to another email account on Aug. 5, 2015, stating that he, Walsh, created one video and that the other video depicted a child he had met on a school trip.

Each count of distribution of child pornography carries a mandatory minimum penalty of five years in prison, a maximum potential penalty of 20 years in prison, and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Terence S. Opiola, with the investigation leading to the charges.

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

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

CAMDEN, N.J. – A Deptford, New Jersey, man today admitted robbing five New Jersey banks and one Pennsylvania bank between June 2015 and September 2015, U.S. Attorney Paul J. Fishman announced.

Michael A. Fanelli, a/k/a Michael Carducci, 36, pleaded guilty before U.S. District Judge Reneé Marie Bumb in Camden federal court to an information charging him with six counts of bank robbery.

According to documents filed in this case and statements made in court, Fanelli robbed the following banks on the dates set forth below:

Bank

Location

Date

Cornerstone Bank

West Deptford, New Jersey

June 2, 2015

Fulton Bank

Mullica Hill, New Jersey

June 5, 2015

Malvern Federal Savings Bank

Concordville, Pennsylvania

July 22, 2015

Susquehanna Bank

Mullica Hill, New Jersey

July 28, 2015

Susquehanna Bank

Mullica Hill, New Jersey

Aug. 21, 2015

National Penn Bank

Florence, New Jersey

Sept. 24, 2015

 

Fanelli typically robbed each bank by approaching a teller, displaying what appeared to be a firearm, and demanding money.

Fanelli robbed the same Susquehanna Bank on July 28, 2015 and August 21, 2015. Immediately following his robbery of National Penn Bank on Sept. 24, 2015, Fanelli was followed by law enforcement officers to his residence, where he was taken into custody. 

Each bank robbery count carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is set for June 17, 2016.

U.S. Attorney Fishman credited special agents of the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge William F. Sweeney in Philadelphia, with the investigation leading to today’s plea. He also thanked the West Deptford, Harrison Township, and Florence Township police departments, as well as the Gloucester County Prosecutor’s Office and the Pennsylvania State Police for their assistance.

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

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

CAMDEN, N.J. – A former employee of The Vacation Ownership Group LLC was sentenced today to 15 months in prison for his role in conspiring to defraud owners of timeshare properties by offering phony consulting services, U.S. Attorney Paul J. Fishman announced.

Steven Cox, a/k/a “Steve Coluzzi,” 52, of Ventnor, N.J., pleaded guilty on May 7, 2013, before U.S. District Judge Noel Hillman to a superseding information charging him with one count of conspiracy to commit mail and wire fraud. Judge Hillman imposed the sentence today in Camden federal court.

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

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

In 2010, Cox and several co-defendants started working at the VO Group and were trained by VO Group managers to call customers using prepared scripts. The defendants gave the customers the false impression that they were working for a bank or lending institution. After hearing defendants’ false representations, some customers sent checks to the VO Group. Cox told one victim that the victim could settle his timeshare debt for a large discount by mailing a $26,585 check to the VO Group. Cox admitted causing more than $200,000 in losses.

In addition to the prison term, Judge Hillman sentenced Cox to three years of supervised release. Restitution will be determined at a future hearing.

U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident

Agency, under the direction of Acting Special Agent in Charge Andrew Campi in Newark; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia, New York Region, for their roles in the investigation leading to the guilty pleas. He also thanked the N.J. Department of Labor, Benefit Payment Control Unit, for its assistance.

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

Defense counsel: Jeffrey M. Miller Esq., Philadelphia

TRENTON, N.J. - A Florida man today admitted trading on material, nonpublic information concerning Gilead Sciences Inc.’s $11 billion acquisition of New Jersey-based Pharmasset Inc., U.S. Attorney Paul J. Fishman announced.

Jay Fung, 42, of Delray Beach, Florida, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with conspiracy to commit securities fraud.

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

In November 2011, a conspirator who worked at a global wealth management firm learned that Pharmasset was going to be sold for a significant profit per share. On Nov. 18, 2011, the conspirator passed the inside information to Fung, who then purchased call options and shares of Pharmasset.

On Nov. 21, 2011, Gilead publicly announced that it had entered into an agreement to acquire Pharmasset for approximately $11 billion, or $137 per share in cash. The purchase price represented an approximately 89 percent premium over Pharmasset’s closing price of $72.67 on Nov. 18, 2011.

Following the public announcement of Gilead’s acquisition of Pharmasset, Fung sold the Pharmasset shares and options he had purchased on Nov. 18, 2011, for total illegal profits of more than $250,000.

Fung faces a maximum penalty of five years in prison and a $250,000 fine, or twice the profits from the offense. Per his plea agreement, Fung must also consent to the entry of a forfeiture money judgment in the amount of $345,245. Sentencing is set for June 20, 2016.

The U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Fung today.

U .S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, with the investigation leading to today’s plea. He also thanked the SEC for the assistance provided by its Market Abuse Unit, under the direction of Joseph Sansone and Robert Cohen, and its Philadelphia Regional Office, under the direction of Sharon Binger.

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

Today’s plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov

Defense counsel:  Jeffrey L. Cox, Boca Raton, Florida                                                                                                                                                               

NEWARK, N.J. – The Justice Department announced the launch of “Combating Religious Discrimination Today,” a new interagency community engagement initiative designed to promote religious tolerance, challenge religious discrimination and enhance enforcement of religion-based hate crimes.  The Justice Department’s Civil Rights Division, in partnership with other federal agencies, is hosting a series of community roundtables across the country that focus on protecting people and places of worship from religion-based hate crimes; combating religious discrimination, including bullying, in education and employment; and addressing unlawful barriers that interfere with the construction of places of worship.

The inaugural roundtable is taking place today at the U.S. Attorney’s Office in Newark and is focusing on addressing bullying and religious discrimination in schools. It will examine how students encounter bullying and harassment based on their actual or perceived religion, as well as discrimination based on religious clothing, holidays and expression.

Subsequent roundtables will focus on a variety of related topics, including a discussion in Dallas that will center on preventing and prosecuting religion-based hate crimes targeting individuals and houses of worship; a meeting in Birmingham, Alabama, that will examine religious discrimination in employment; and a convening in Detroit that will address discrimination by local zoning officials against congregants seeking to build places of worship.  The final roundtable will also concentrate on bullying and religious discrimination in schools and will take place in Palo Alto, California.

“Protecting the rights of everyone to worship as they choose is fundamental to our way of life,” U.S. Attorney Paul J. Fishman, District of New Jersey, said. “Our office has worked with our law enforcement partners to enhance and maintain connections with the many communities of faith that exist in a state as diverse as New Jersey. The discussions that we’re kicking off here today are a natural extension of that work, and I look forward to continuing this important dialogue with all of our partner agencies and the people we represent.”

“Hate-motivated violence, harassment and discrimination violate America’s laws and threaten our founding vision of a free and tolerant society that welcomes people from every creed and walk of life,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “Robust community engagement and meaningful dialogue can help our country fulfill its promise of religious freedom, and we look forward to tackling this challenging work with creative solutions in the months ahead.”

Agencies participating in the new initiative include the Departments of Education, Homeland Security (DHS) and Labor (DOL); the Equal Employment Opportunity Commission (EEOC); and within the Justice Department, the Civil Rights Division, FBI, Office of Justice Programs, Executive Office for U.S. Attorneys and Community Relations Service.  Agency officials will facilitate the roundtable discussions to help identify key priorities and lead robust dialogue with community members and civil rights advocates.

“We are eager to continue partnering with our federal colleagues to address bias and discrimination in our nation’s schools, and to continue our strong enforcement of federal civil rights laws to ensure that all students can learn in safe school environments,” said Catherine E. Lhamon, Assistant Secretary for Civil Rights at the Department of Education.

“Since DHS was established, we have worked closely with communities across the country to combat intolerance and ensure safety at houses of worship,” said Officer Megan H. Mack of the DHS Office for Civil Rights and Civil Liberties.  “Ensuring the protection of uniquely American rights and liberties is a fundamental part of DHS’s mission to build safe and resilient communities.  We look forward to expanding our already extensive engagement with communities by working closely with our federal partners on this effort.”

“A diverse and inclusive workplace reflects the strength and richness of America and its history,” said Director Patricia Shiu of the DOL Office of Federal Contract Compliance Programs.  “Built by immigrants from every corner of the world, our nation’s greatness must not be diminished by unlawful religious discrimination.  The Department of Labor welcomes the opportunity to collaborate with our federal partners on this important issue.”

“Our nation was founded on the principles of tolerance and equality,” said Jenny R. Yang, EEOC Chair.  “Working with our federal and community partners enables EEOC to better understand and address religious discrimination in the workplace, and to inform affected communities of protections under federal law.” 

The new initiative supplements the department’s long-standing criminal and civil enforcement efforts to prevent religious discrimination and religion-motivated hate crimes.  Since the 9/11 terrorists attacks, the department has investigated more than 1,000 incidents involving acts of violence, threats, assaults, vandalism and arson targeting diverse religious and ethnic groups, prosecuting dozens of these cases to the fullest extent of the law.  The Civil Rights Division, often in close partnership with other federal agencies, also utilizes civil enforcement to combat religious discrimination and protect religious freedom.  This includes preventing religious discrimination in education, through Title IV of the Civil Rights Act of 1964, and in employment, through Title VII of the Civil Rights Act of 1964.  In addition, the division enforces the Religious Land Use and Institutionalized Persons Act, which protects individuals, houses of worship and other religious institutions from discrimination in zoning and landmarking laws.  For more information about the new initiative, please email CombatingReligiousDiscrimination@usdoj.gov.  Additionally, EEOC is posting a ‘What You Should Know’ document today on its homepage, www.eeoc.gov, compiling EEOC’s resources regarding religious and national origin-based discrimination.

NEWARK, N.J. – A family doctor practicing in Bergen County, New Jersey, was charged today with accepting bribes in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Bernard Greenspan, 78, of Saddlebrook, New Jersey, was indicted by a federal grand jury in Newark. The 10-count indictment charges Greenspan with one count of conspiring to commit violations of the Anti-Kickback Statute, the Federal Travel Act and wire fraud; three substantive violations of the Anti-Kickback Statute; three substantive violations of the Federal Travel Act; and three substantive violations of wire fraud. Greenspan will be arraigned at a later date.             

“The charges contained in the indictment allege an extremely lucrative pattern of soliciting and accepting illegal payments for referrals to a specific testing lab,” said U.S. Attorney Fishman. “This indictment is part of our continued commitment to prosecute those physicians who sought to enrich themselves through their involvement in the BLS bribery scheme.”

“The FBI, in conjunction with our law enforcement partners, the U.S. Department of Health and Human Services’ Office of Inspector General, the Internal Revenue Service, and the U.S. Postal Inspection Service, will continue to investigate allegations of fraud and kickback schemes that undermine the integrity of our health care system," stated Acting Special Agent in Charge Andrew Campi. "We urge anyone aware of this type of illegal activity to contact the FBI.”

“This indictment is another reminder that kickbacks in connection with federal health care programs are illegal and unacceptable,” said Scott J. Lampert, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services. “Taking such payments subverts the notion that patients should come before profits.”

To date, 39 people – 26 of them doctors – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. It is believed to be the largest number of medical professionals ever prosecuted in a bribery case. The investigation has recovered more than $11.5 million through forfeiture.

According to the indictment:

Between March 2006 and April 2013, Greenspan received approximately $200,000 in bribes from BLS employees and associates. Greenspan periodically solicited, and received from the BLS employees and associates, monthly bribe payments in the form of sham rental, service agreement, and consultant payments. Greenspan solicited and received other bribes, including payment for holiday parties for Greenspan and his office staff. BLS hired – at Greenspan’s specific request – a patient of Greenspan’s with whom he was having a sexual relationship. Greenspan’s referrals generated approximately $3 million in lab business for BLS.

Greenspan is the second physician to be indicted in connection with the BLS bribery scheme. Brett Ostrager was indicted on Aug. 11, 2015, and pleaded guilty on Dec. 22, 2015, after his motion to dismiss the indictment was denied by Judge Chesler. He is awaiting sentencing. 

Each of the Anti-Kickback and Federal Travel Act counts carries a maximum potential sentence of five years in prison; each of the wire fraud counts carries a maximum potential penalty of 20 years in prison. All of the counts carry a maximum $250,000 fine, or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and HHS-OIG Special Agent in Charge Lampert.

The government is represented by Assistant U.S. Attorneys Joseph N. Minish and Danielle Alfonzo Walsman, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $1.29 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: Damian Conforti Esq., Newark, NJ