District of New Jersey

NEWARK, N.J. – A self-employed loan broker today admitted using bogus documents and simultaneous applications at multiple banks to fraudulently obtain home equity lines of credit, resulting in losses of $1.3 million, U.S. Attorney Paul J. Fishman announced.

Sung Ho Mo, a/k/a “Douglas Mo,” 53, of Totowa, New Jersey, pleaded guilty  before U.S. District Judge Katharine S. Hayden to an information charging him with conspiracy to commit bank fraud.  He was previously arrested on Aug. 4, 2015 and released on bail.

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

Mo was the primary owner and operator of “Douglas Mo Mortgage,” a mortgage brokerage business in New Jersey. From 2005 through January 2014, Mo conspired with others, including a tax preparer, to fraudulently obtain home equity lines of credit and first mortgages.

As part of the scheme, Mo fraudulently obtained multiple home equity lines of credit from multiple banks, using his primary and secondary residences in Totowa as collateral for the loans. To trick the banks into issuing the lines of credit, Mo first engaged in a practice that he described as “shotgun loans,” in which he applied for several home equity lines of credit with multiple banks at the same time.  By engaging in this practice, Mo thwarted the banks’ efforts to learn of security interests held by other banks on his homes. 

Second, Mo falsely inflated his income by paying a tax preparer  to produce false documents, including bogus W-2 forms, federal income tax returns and paystubs. Mo then submitted the fraudulent documents to the banks in support of his loan applications. After receiving home equity lines of credit, Mo used the proceeds for his own benefit and then defaulted on the loans. In addition, Mo obtained first mortgages for his clients using the same fraudulent scheme.

At sentencing, Mo faces a maximum potential penalty of 30 years in prison, a $1 million fine, and will be ordered to pay restitution. Sentencing is scheduled for June 13, 2016. 

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

The government is represented by Assistant U.S. Attorney Anthony Moscato of the New Jersey U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Assistant Federal Public Defender Kevin F. Carlucci Esq., Newark

TRENTON N.J. – A Middlesex County, New Jersey, man today admitted shoplifting Barnes and Noble merchandise, selling the goods on eBay and failing to report the illicit proceeds to the IRS, U.S. Attorney Paul J. Fishman announced.

Dominick James Izzo, 49, of Piscataway, New Jersey, and Port Orange, Florida, pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of transportation of stolen goods and one count of tax evasion.

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

Izzo admitted that he stole merchandise from Barnes & Noble stores in New Jersey, Florida and elsewhere using a “booster bag” lined with aluminum to evade anti-theft alarms. He then listed the stolen merchandise on eBay using nominee seller accounts to conceal his identity. Izzo accepted payment for the stolen merchandise from purchasers via nominee PayPal accounts. Once Izzo received funds via domestic wire transfer from the purchasers, he shipped the stolen merchandise from New Jersey and Florida to the purchasers in several different states.

For the tax years 2009, 2010 and 2011, Izzo admitted he intentionally failed to report $399,485 in income he received in connection with the sale of stolen merchandise from Barnes & Noble and other businesses. As a result, Izzo owed the government approximately $67,360.

The transportation of stolen goods count to which Izzo pleaded guilty is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine. The tax evasion count carries a maximum potential penalty of five years in prison and $250,000 fine. Sentencing is scheduled for June 10, 2016.  

U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, and special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, 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: Patrick McMahon Esq., Assistant Federal Public Defender, Newark.

NEWARK, N.J. – A Romanian citizen today admitted orchestrating an international hacking scheme targeting retailers, security companies, medical offices and individuals in the United States, U.S. Attorney Paul J. Fishman announced.

Mircea-Ilie Ispasoiu, 30, of Drobeta-Turnu Severin, Romania, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to Count One and Count Seven of an indictment charging him with wire fraud and aggravated identity theft.

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

From August 2011 through February 2014, Ispasoiu was employed as computer systems administrator at a large financial institution in Romania. Ispasoiu’s scheme involved hacking networks belonging to retailers, security companies, medical offices and individuals in order to steal user names and passwords, personal identifiers and credit and debit card data. Ispasoiu also gained access to a computer at a large security company that ran background checks on job applicants. Ispasoiu stole the applicants’ personal identifying information, including their fingerprints.

The wire fraud charge to which Ispasoiu pleaded guilty carries a maximum potential penalty of 20 years in prison. The aggravated identity theft charge carries a mandatory two-year term of imprisonment to run consecutive to any other sentence. Both charges carry a $250,000 fine, or twice the gross gain or loss from the offenses. Sentencing is set for June 29, 2016.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Newark Field Office, under the direction of Acting Special Agent in Charge Jeffrey Wood, with the investigation leading to the plea. U.S. Attorney Fishman also thanked the Justice Department’s Office of International Affairs in Washington, as well as the Prosecutor’s Office attached to the High Court of Cassation and Justice in Romania and its law enforcement partners, for their support.

The government is represented by Assistant U.S. Attorney Daniel Shapiro of the Computer Hacking and Intellectual Property Section of the Office’s Economic Crimes Unit.

Defense counsel: Kevin Carlucci Esq., Assistant Federal Public Defender, Newark

NEWARK, N.J. – A Polish citizen living in Garfield, New Jersey, was arrested this morning by U.S. Marshals as a result of an extradition request related to his alleged involvement in a 1996 murder in Poland, U.S. Attorney Paul J. Fishman announced.

Rafal Kaldon, 38, is charged by complaint with being a fugitive from a foreign county. He appeared this afternoon before U.S. Magistrate Judge Mark Falk in Newark federal court and was detained.

According to the complaint:

Pursuant to a treaty with the United States, the government of Poland submitted a formal request through diplomatic channels for Kaldon’s extradition.

On the evening of Aug. 25, 1996, Kaldon and an accomplice allegedly entered a disco in Poland, walked up to a man, and without speaking to him, began to beat him until he collapsed to the floor. Afterwards, they continued to kick and beat him. Witnesses in the disco attempted to resuscitate the victim, but he was pronounced dead at the scene. Kaldon allegedly retrieved his passport and cash from his sister immediately after the attack and fled Poland.

U.S. Attorney Fishman credited U. S. Marshals, under the direction of U.S. Marshal Juan Mattos in Newark, with the arrest of Kaldon after being a fugitive from Poland for almost 20 years.

 The government is represented by Assistant U.S. Attorney Rebecca M. Sherill of the U.S. Attorney’s Office Criminal Division in Newark.

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

NEWARK, N.J. – A former registered representative of a broker-dealer offering investment products and services, including variable life insurance and annuities, was sentenced today to 33 months in prison for using his position to steal more than $650,000 from the company’s clients, U.S. Attorney Paul J. Fishman announced. 

Kwen Y. Chun, 59, of Midland Park, New Jersey, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging him with one count of mail fraud. Judge Wigenton imposed the sentence today in Newark federal court.

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

From September 1998 through June 2014, Chun was employed by the company as a registered agent, with authority to assist clients with withdrawing funds from annuities, applying for deferred annuities, and processing loan requests. Chun diverted funds that belonged to at least eight clients to bank accounts under his control and converted those funds to his own use.      

Chun opened a bank account in the name of one client, using the client’s identification without the client’s knowledge or permission. Based upon false representations to the company that the client was requesting withdrawals and loans, Chun caused the company to wire monies from the client’s insurance policies and annuity accounts into the phony account. Chun also admitted that he caused the company to mail numerous checks to his Midland Park residence based upon false representations to the company that at least three other clients had requested to take loans on their insurance policies, which he then deposited into accounts under his control.

Chun admitted to causing other clients to obtain loans from company insurance policies, or to provide him with checks and cash, which Chun falsely advised he would use to open investment accounts on behalf of those clients. Instead, Chun deposited those loan proceeds into bank accounts under his control. He admitted that he provided one of the company’s clients with fabricated statements that purported to show the interest and balance in the client’s fictitious investment account. Chun also provided two other clients with paperwork that purported to illustrate the benefits that they would receive for their alleged annuity investment.

In addition to the prison term, Judge Wigenton ordered Chun to serve two years of supervised release and pay $530,418.34 in restitution.

U.S. Attorney Fishman praised inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; criminal investigators with the U.S. Attorney’s Office in Newark; the N.J. Bureau of Securities, Office of the N.J. Attorney General, under the direction of Acting Attorney General John J. Hoffman; and the Bergen County Prosecutor’s Office, under the direction of Prosecutor Acting Prosecutor Gurbir S. Grewal, for the investigation leading to today’s sentencing.    

The government is represented by Senior Litigation Counsel Leslie Faye Schwartz of the U.S. Attorney’s Office Economic Crimes Unit and Assistant U.S. Attorney Peter Gaeta of the U.S. Attorney’s Office Asset Forfeiture and Money Laundering Unit in Newark.

Defense counsel: Joshua P. Cohn Esq., Saddle Brook, New Jersey

CAMDEN, N.J. – A Cumberland County, New Jersey, woman today admitted her role in a conspiracy to boost business at a tax preparation company she operated by preparing bogus income tax returns for her clients, U.S. Attorney Paul J. Fishman announced.

Noemi Pender, 57, of Rosenhayn, New Jersey, pleaded guilty before U.S. District Judge Noel L. Hillman in Camden federal court to Count One of an indictment charging her with conspiring to aid and assist others in the preparation of false and fraudulent tax returns.

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

Pender was a tax preparer who operated Pender Tax Services in Rosenhayn. For the tax years 2007 through 2011, Pender and Grace Garrett, 63, of Pittsgrove, New Jersey, sought to increase referrals, enhance their business, and enrich themselves by preparing and filing income tax returns based on false information. They used a number of fraudulent practices, including falsely claiming a filer was a “head of household,” inventing and inflating deductions, creating fictitious dependents, and creating false credits for education and childcare.

The bogus returns resulted in a tax loss to the government of more than $340,000.

The conspiracy charge to which Pender pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 10, 2016. Garrett previously pleaded guilty to her role on May 19, 2015, and awaits sentencing on March 22, 2016.

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 guilty plea.

The government is represented by Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office in Camden.

Defense counsel: Jeffrey Zucker Esq., Camden

Olympus Corp. of the Americas, Nation’s Largest Distributor of Endoscopes, Also Agrees to Reforms and Subsidiary Admits to Foreign Bribery

NEWARK, N.J. – The United States’ largest distributor of endoscopes and related equipment will pay $623.2 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals, U.S. Attorney Paul J. Fishman of the District of New Jersey and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division announced today.  U.S. Attorney Fishman and Principal Deputy Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division also announced that a subsidiary of the distributor will pay $22.8 million to resolve criminal charges relating to the Foreign Corrupt Practices Act (FCPA) in Latin America. 

Anti-Kickback Statute Violations

Olympus Corp. of the Americas (OCA) was charged in a criminal complaint filed today in Newark, New Jersey, federal court with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs.  OCA has entered into a three-year deferred prosecution agreement (DPA) that will allow it to avoid conviction if it complies with the reform and compliance requirements outlined in the agreement. 

“For years, Olympus Corporation of the Americas and Olympus Latin America dropped the compliance ball and failed to have in place policies and practices that would have prevented the substantial kickbacks and bribes they paid. It is appropriate that they be punished for that,” U.S. Attorney Fishman said. “At the same time, the deferred prosecution agreement takes into account the companies’ cooperation and commitment to fully functional corporate compliance.”

As a result of the conduct outlined in the government’s criminal complaint and DPA, OCA has agreed to pay a $312.4 million criminal penalty and $310.8 million to settle civil claims under the federal and various state False Claims Acts, the largest total amount paid in U.S. history for violations of the AKS and the largest amount ever paid by a medical device company.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Mizer.  “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.  In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system.”

“The FBI’s stance on corruption and fraud is that of zero tolerance and therefore one of our highest priorities,” said Acting Special Agent in Charge Andrew Campi, FBI-Newark. “In this time of international commerce, whether at home or overseas, the FBI is committed to fighting both corruption and fraud. Companies should have the opportunity to prosper through honest business practices, not the practice of bribery and back room deals.”

In a separate DPA, Olympus Latin America Inc. (OLA), a subsidiary of OCA, will pay a $22.8 million criminal penalty for violations of the FCPA.

The criminal complaint against OCA, which OCA agrees is true, charges that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes.  For example:

• OCA gave a hospital a $5,000 grant to facilitate a $750,000 sale;

• OCA held up a $50,000 research grant until a second hospital signed a deal to purchase Olympus equipment;

• OCA paid for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus; and

• a doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.

These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million. 

The criminal complaint alleges that the improper payments happened while Olympus lacked training and compliance programs.  Unlike other medical and surgical products companies, Olympus did not create the position of compliance officer until 2009 and did not hire an experienced compliance professional until August 2010. 

The DPA requires OCA to adopt several compliance measures to remedy its problems:

• OCA must enhance its compliance training and maintain an effective compliance program;

• OCA must maintain a confidential hotline and website for OCA employees and customers to report wrongdoing.

• OCA’s chief executive officer and board of directors must certify annually that the program is effective; and

• OCA must adopt an executive financial recoupment program requiring executives who engage in misconduct or fail to promote compliance to forfeit up to three years of performance pay.

Larry Mackey, a former federal prosecutor best known for trying the Oklahoma City bombing cases, has been selected as an independent monitor to evaluate and oversee Olympus’ compliance with the DPA.  He was selected by U.S. Attorney Fishman under department guidelines and approved by the Deputy Attorney General.  The DPA and monitor will remain in place for three years and can be extended for another two years if Olympus violates the DPA. 

In the civil settlement, Olympus agrees to pay $310.8 million to the federal government and the states to resolve claims that Olympus’s payment of kickbacks caused false claims to be submitted to federal health care programs Medicare, Medicaid and TRICARE, violating not only the AKS but also the federal and various state False Claims Acts.  The federal share of the civil settlement is $267.3 million, and Olympus will pay $43.5 million to participating states that contributed to the falsely claimed Medicaid payments at issue.

The civil settlement resolves a lawsuit filed by John Slowik, the former chief compliance officer of OCA, in the District of New Jersey, under the federal and various state False Claims Act. The federal False Claims Act contains a qui tam, or whistleblower, provision that permits whistleblowers to file suit on behalf of the United States for false claims against the government, and to share in any recovery.  Mr. Slowik will receive $44.1 million from the federal share and $7 million from the state share of the civil settlement amount.

FCPA Violations

In a separate criminal complaint filed today in Newark federal court, OCA’s Miami-based subsidiary OLA was charged with FCPA violations in connection with improper payments to health officials in Central and South America, and OLA entered a separate three-year DPA.  According to court documents, from 2006 until August 2011, OLA implemented a plan to increase medical equipment sales in Central and South America by providing payments to health care practitioners at government-owned health care facilities.  These payments included cash, money transfers, personal grants, personal travel and free or heavily discounted equipment.  The primary method to deliver these illicit benefits was through “training centers,” nominally set up to educate and train doctors, but which OLA used to provide benefits to pre-selected practitioners.  OLA and its conspirators paid nearly $3 million to practitioners to induce the purchase of Olympus products and recognized more than $7.5 million in profits as a result.

“Olympus Latin America admitted to bribing publicly employed health care providers and hospital officials across Central and South America so that it could illegally win business and sell its products,” said Principal Deputy Assistant Attorney General Bitkower.  “OLA’s illegal tactics in Central and South America mirrored Olympus’s conduct in the United States.  The FCPA resolution announced today demonstrates the department’s commitment to ensuring the integrity of the health-care equipment market, regardless whether the illegal bribes occur in the U.S. or abroad.”

OLA entered into the DPA with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the District of New Jersey.  The agreement requires OLA to pay a criminal penalty of $22.8 million, retain the same compliance monitor as for OLA (Mr. Mackey) for a period of three years, and implement a number of compliance measures.  The department reached this resolution based on a number of factors, including that OLA did not voluntarily disclose the misconduct in a timely manner, but did receive credit of a 20 percent reduction on its penalty for its cooperation, including its extensive internal investigation, translation of numerous foreign language documents and collecting, analyzing and organizing voluminous evidence.

Corporate Integrity Agreement

In addition to the criminal and civil resolutions, Olympus executed a corporate integrity agreement (CIA) with the Department of Health and Human Services-Office of Inspector General (HHS-OIG).  The CIA details the compliance program OCA must maintain, which must include:

• compliance responsibilities for OCA management and the board of directors;

• a health care compliance code of conduct that includes certain standards;

• training and education that includes specified standards;

• requirements for consulting arrangements, grants and charitable contributions, management of field assets and review of travel expenses;

• risk assessment and mitigation process; and

• review procedures for testing the compliance program.

”Olympus Corp. of the Americas' and its subsidiaries' greed-fueled kickback scheme threatened the impartiality of medical decision-making and the financial integrity of Medicare and Medicaid,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General's region including NJ.  “HHS-OIG and our law enforcement partners remain vigilant and committed to protecting beneficiaries and taxpayers from those seeking to unlawfully enrich themselves.”

The U.S. Attorney’s Office of the District of New Jersey prosecuted the criminal case under the AKS against Olympus and, with the Civil Division’s Commercial Litigation Branch, reached the civil settlement.  The U.S. Attorney’s Office of the District for New Jersey and the Criminal Division’s Fraud Section prosecuted the criminal case under the FCPA against OLA.  The HHS Office of Counsel to the Inspector General, the FBI, HHS-OIG Office of Criminal Investigations and the National Association of Medicaid Fraud Control Units provided assistance.

The investigations were conducted jointly by special agents and investigators from the FBI Newark Field Office, under the direction of Acting Special Agent in Charge Andrew Campi; the HHS-OIG, under the direction of Special Agent in Charge Scott J. Lampert; and the FBI Allentown, Pennsylvania, Field Office, under the direction of Special Agent in Charge William F. Sweeney Jr. in Philadelphia.

Assistant U.S. Attorneys R. David Walk Jr. and Deborah J. Gannett of the District of New Jersey’s Health Care and Government Fraud Unit in Newark represented the government in the AKS criminal prosecution.  David E. Dauenheimer, deputy chief of the Civil Division for the District of New Jersey, and Senior Trial Counsel David T. Cohen of the DOJ Civil Division’s Commercial Litigation Branch represented the government in the prosecution of the civil case.  Mary Riordan and Nicole Caucci of the HHS-OIG negotiated the CIA.  

DOJ Fraud Section Trial Attorney James P. McDonald and Assistant U.S. Attorneys Walk and Gannett prosecuted the FCPA case. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.

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.

NEWARK, N.J. – A Ringwood, New Jersey, man was sentenced today to three years of probation for transporting an American black bear he illegally killed in New Jersey across state lines to New York, and covering up the crime by creating false records and staging a fake kill site, U.S. Attorney Paul J. Fishman announced.

Martin Kaszycki, 36, previously pleaded guilty before U.S. Magistrate Judge Leda D. Wettre to an information charging him with two counts of violating the Lacey Act by transporting a bear he had illegally killed in Newfoundland, New Jersey, to Sterling State Forest in New York, and covering up the crime by making false statements and staging a fake kill site. Judge Wettre imposed the sentence today in Newark federal court.

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

On Oct. 5, 2012, Kaszycki killed a 450-pound, male, America black bear from an elevated tree stand, with a bow and arrow, out of hunting season, after setting out bait for the bear within 300 feet of the stand near his place of business in Newfoundland, all in violation of New Jersey state laws. He then drove the bear across state lines to New York, where he falsely told a New York weigh station employee that he had killed the bear in New York’s Sterling State Forest, causing the employee to record the false information on a New York state Bear Data Form.

On Oct. 8, 2012, Kaszycki drove the hide and skull of the bear to a taxidermy shop in Pennsylvania to arrange for the parts to be mounted for a trophy display and falsely represented to a taxidermist that he had hunted the bear in New York, causing the taxidermist to record that information on a New York State Department of Environmental Conservation Taxidermist Bear Report.

When N.J. Division of Fish and Wildlife Officers confronted Kaszycki about the bear on Oct. 10, 2012, at his place of business, Kaszycki told them he had killed the bear in New York. Later that night, Kaszycki drove the guts of the bear to Sterling State Forest in New York, where he placed them in the woods to stage a fake kill site. When confronted again the next day by state officials about the bear, he led those officials to the staged kill site and told them it was the location where he had killed the bear.

The Lacey Act prohibits the interstate transport of wildlife taken or possessed in violation of any state law or regulation as well as the making of a false record for wildlife that has been or is intended to be transported in interstate commerce. New Jersey state laws prohibit the hunting of an American black bear out of season. New Jersey laws also prohibit the hunting of these bears while elevated in a standing tree within 300 feet of a baited area or with a bow and arrow.

As part of his plea agreement, Kaszycki must pay a fine of $5,000 to the U.S. Fish and Wildlife Service Lacey Act Reward Fund. He must also forfeit the skull and hide of the bear and pay $1,250 to the Woodlands Wildlife Refuge for the care and release of orphaned and injured American black bears in New Jersey.

In addition, Kaszycki is prohibited from hunting, shooting, wounding, trapping, fishing, or killing wildlife or wild animals anywhere in the United States by any means during the term of probation or renew any license, permit, or other certificate that would entitle him to hunt during that time. He must also publish a statement in the N.J. Division of Fish and Wildlife (NJDFW) Hunting and Trapping Digest acknowledging the criminal conduct to which he has pleaded guilty.

U.S. Attorney Fishman credited special agents of the U.S. Fish and Wildlife Service, Office of Law Enforcement, under the direction Resident Agent in Charge Preston Fant, as well as the N.J. Division of Fish and Wildlife, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Kathleen P. O’Leary of the U.S. Attorney's Office Health Care and Government Fraud Unit in Newark.

Defense counsel: Peter L. Festa Esq., Paterson, New Jersey

NEWARK, N.J. – A Passaic County, New Jersey, member of the New Jersey set of the Grape Street Crips today admitted his leadership role in a conspiracy to distribute 2.8 kilograms of crack-cocaine, U.S. Attorney Paul J. Fishman announced.

Jamar Hamilton, a/k/a “Gunner,” 27, of Totowa, New Jersey, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to Count 22 of the fourth superseding indictment charging him with participating in a continuing criminal enterprise, a statute that applies to organizers, supervisors, or managers of drug-trafficking organizations who derive substantial income from their criminal activities.

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

The New Jersey set of the Grape Street Crips controlled drug trafficking and other criminal activities in various areas of Newark. Hamilton and other members of the gang, including Hakeem Vanderhall, a/k/a “Keem,” a/k/a “Sugar Bear,” Eric Concepcion, a/k/a “Eddie Arroyo,” a/k/a “E-Wax,” a/k/a “Wax,” Tyquan Clark a/k/a “Tah,” and Rashan Washington, a/k/a “Shoota,” used and shared a dedicated cell phone to accept orders for, and distribute, thousands of clips of crack-cocaine to other distributors of crack-cocaine, including members of the New Jersey Grape Street Crips.

To protect their gang and drug territory, the New Jersey Grape Street Crips operating in the 6th Avenue and North 5th Street location used “community guns” that were easily accessible to gang members. During the course of the investigation, law enforcement agents seized numerous firearms, including a .410 caliber assault rifle, a.45 caliber Thompson semi-automatic carbine, a 7.62 caliber assault rifle, and numerous semi-automatic handguns.

The charge to which Hamilton pleaded guilty carries a statutory mandatory minimum of 20 years in prison, a maximum of life in prison and a $2 million fine. Sentencing is set for June 9, 2016.

Clark has pleaded guilty to his role in the conspiracy and awaits sentencing. Charges against Vanderhall, Concepcion, and Washington remain pending. The charges and allegations against them are merely accusations, and they are presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl J. Kotowski, and special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi, with the investigation leading to today’s guilty plea. 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 A. Ambrose; and the Essex County Sheriff’s Office, under the direction of 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 Organized Crime Drug Enforcement Task Force (OCDETF)/Narcotics Unit of the Criminal Division in Newark.

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

Defense counsel: Howard P. Lesnik Esq., Newark

NEWARK, N.J. – A Bergen County man today admitted selling fraudulent massage therapy training certificates to workers at various massage parlors in order to facilitate prostitution activities at those locations, U.S. Attorney Paul J. Fishman announced.

Robert W. Miller, 67, of Westwood, N.J., pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging him with using facilities in interstate commerce to promote prostitution, and performing an act to promote, manage, establish, carry on and facilitate that unlawful activity. 

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

Miller served as a Westwood councilman for approximately seven years prior to his resignation in 2015, and previously served as a councilman in the Village of Ridgewood, New Jersey, from 1996 to 1998. He owned and operated RWM Associates Inc., which purported to provide personnel department services for small and medium-sized businesses. Miller held himself out as a businessman who, for a fee of $500 to $2,500, could provide a massage therapy training certificate to anyone who wished to obtain a massage license with the State of New Jersey without receiving the required training. He also offered to provide a transcript listing the classes purportedly taken and the grades received by customers willing to pay for the fraudulent massage training certificate. 

Between January 1997 and August 2013, Miller provided at least 50 fraudulent massage therapy training certificates to 25 different massage parlors located in Union, Passaic, Hudson and Middlesex counties. He admitted he knew that many of the massage parlors were being operated as fronts for prostitution and that the phony documents allowed the workers to continue to engage in prostitution activities under the guise of providing legitimate massage services. Miller also used A.R.M. Enterprises L.L.C., a separate company which he owned, to place advertisements in newspapers for massage parlors using discrete wording which signaled that the massage parlor was also a prostitution business. 

The charge to which Miller pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. As part of his plea agreement, defendant Miller will forfeit $95,926, consisting of $25,826 seized from his residence in August of 2013 as well as an additional $70,100 which he provided to the FBI in December of 2014, which Miller acknowledged represented property derived from or traceable to his unlawful activity.  Sentencing is scheduled for May 19, 2016. 

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

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

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

NEWARK, N.J. – A West New York, New Jersey, man was sentenced today to 19 months in prison for paying cash bribes to a West New York fire official to eliminate millions of dollars in outstanding fines and penalties on buildings with fire code violations, U.S. Attorney Paul J. Fishman announced.

Victor Coca, 50, previously pleaded guilty before U.S. District Judge Esther Salas to Count One and Count Two of an indictment charging him with paying bribes to a local government employee. Judge Salas imposed the sentence today in Newark federal court.

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

Coca was the owner and president of a general contracting company in West New York. Two buildings in West New York had outstanding fines for fire code violations. The first building, located on Bergenline Avenue and owned by a friend of his, had approximately $14,500 in fines and penalties for outstanding fire code violations. Coca agreed to pay a fire official for the West New York Bureau of Fire Prevention, a witness who was voluntarily cooperating with federal authorities, a $2,000 cash bribe to eliminate the outstanding fire code fines and penalties. On March 27, 2014, Coca handed the fire official a $2,000 cash bribe.

The second building, located on Hudson Avenue and partly-owned by Coca, had more than $8.7 million in fines and penalties for outstanding fire code violations. Coca paid a $5,000 cash bribe to the fire official in return for the fire official purportedly reducing the amount due to the West New York Bureau of Fire Prevention to the initial fine amount of $5,000. 

In addition to the prison term, Judge Salas sentenced Coca to two years of supervised release.

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 sentencing.

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

NEWARK, N.J. – A federal grand jury today indicted a Somerset, New Jersey, man for allegedly accepting cash bribes and sex in exchange for providing employment authorization documents and for concealing his employment of an undocumented immigrant at a hair salon he owned, U.S. Attorney Paul J. Fishman announced.

Arnaldo Echevarria, 38, a former deportation officer with Immigration and Customs Enforcement (ICE), is charged by indictment with seven counts of accepting bribes, one count of harboring an undocumented immigrant and one count of making false statements to immigration authorities. Echevarria will be arraigned in federal court on a date to be determined. He was originally charged by complaint on Apr. 9. 2015.

According to the documents filed in this case:

As a deportation officer, Echevarria enforced immigration and customs laws by identifying, locating, arresting and removing undocumented immigrants from the United States and by supervising certain undocumented immigrants who had not yet been deported.  Undocumented immigrants subject to a deportation order often were able to obtain employment authorization documents which allowed them to legally work in the United States for a one-year period and which could be renewed annually. 

Between 2012 and 2014, Echevarria agreed to obtain employment authorization documents for approximately seven undocumented immigrants who were not lawfully present in the country. In return, Echevarria demanded and received approximately $78,000 in cash bribes. In order to conceal them from immigration authorities, Echevarria falsely stated that they had been granted temporary protected status, which allows nationals from certain countries experiencing environmental disaster, ongoing armed conflict, or other extraordinary conditions to lawfully remain in the United States. None of the individuals who bribed Echevarria had actually applied for, or received, temporary protected status.

In addition to the cash bribes, Echevarria also allegedly demanded and received sex from two of the individuals, one of whom became pregnant with Echevarria’s child. Despite Echevarria encouraging her to have an abortion, the woman delivered the child, and Echevarria told her that no one could find out that he was the child’s father. Afterwards, Echevarria continued to have sex with this individual in exchange for his help with her employment authorization documents.

In December 2012, Echevarria received permission from his superiors at ICE to open a hair salon in West Orange, New Jersey. Echevarria certified to ICE that the hair salon would not conflict with ICE matters and would not involve undocumented workers. However, Echevarria employed his girlfriend at the time, an undocumented immigrant, to manage the salon. Echevarria’s girlfriend had entered the United States illegally, using the name and identification of an individual in Puerto Rico to obtain a Pennsylvania identification card.

Echevarria allegedly knew his girlfriend resided in the United States illegally. Prior to opening the hair salon, Echevarria queried the name and date of birth of his girlfriend’s alias in various law enforcement databases. After opening the salon, Echevarria allegedly ensured that his girlfriend’s illegal status remained a secret by signing the lease for her apartment and by placing her cable and electric bills in his name. In addition to driving his girlfriend and other employees to and from the salon each day, Echevarria also paid the employees in cash and never asked them to fill out employment eligibility paperwork. 

The seven bribery counts each carry a maximum potential penalty of 15 years in prison and a $250,000 fine, twice the gross gain or loss from the offense, or three times the monetary equivalent of the things of value accepted by the defendant. The charges of harboring and making false statements are each punishable by a maximum potential penalty of five years in prison and $250,000 fine, or twice the gross gain or loss arising from the offense. 

U.S. Attorney Fishman credited special agents of ICE, Office of Professional Responsibility, under the direction of Acting Special Agent in Charge John McCabe, with the investigation leading to today’s indictment.

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

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

Defense counsel: Michael Koribanics Esq., Clifton, New Jersey

CAMDEN, N.J. – Two former employees of The Vacation Ownership Group LLC were sentenced today to prison terms for conspiring to defraud owners of timeshare properties, U.S. Attorney Paul J. Fishman announced.

Alfred Giordano, a/k/a “Alex Jordan,” 36, of Belmar, New Jersey, was sentenced to 18 months in prison and Francis Santore, a/k/a “Frank Martin,” 56, of Northfield, New Jersey, was sentenced to 12 months in prison. Both defendants previously pleaded guilty before U.S. District Court Judge Noel L. Hillman to informations charging them with one count of conspiracy to commit mail and wire fraud and one count of mail fraud. Judge Hillman imposed the sentences today in Camden federal court.

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

The Vacation Ownership Group, a/k/a VO Group LLC (VO Group), purported to offer consulting services to owners of timeshares, including timeshare cancellation services.

In January 2010, Giordano started working at the VO Group and was trained by Adam Lacerda to call customers using prepared scripts. Giordano would call customers and give them the false impression that he was working for a bank or lending institution and that he had the customer’s “complaint file” in front of him. After hearing Giordano’s false representations, some customers sent checks to the VO Group. Giordano admitted to causing over $120,000 in losses. Giordano also admitted to devising a separate scheme to defraud the New Jersey Department of Labor by collecting unemployment compensation benefits while working at the VO Group. Giordano admitted to applying for and collecting $13,676 in unemployment compensation benefits to which he was not entitled.

Santore started working at the VO Group in October 2010, where he was alleged trained by Lacerda to lie to customers using prepared scripts. Santore admitted that he would give customers the false impression that he was working for a bank or lending institution. He also admitted that he allowed customers to continue operating under the false impression given by his co-workers that the VO Group had the customer’s “complaint file” from a timeshare resort developer in front of them. Santore admitted that he regularly lied to customers in order to perpetrate the scam. Some of those customers then sent checks to the VO Group. Santore admitted that he falsely told a customer that if the customer paid $8,562 to the VO Group, the group would eliminate the customer’s approximately $18,000 mortgage debt with a timeshare developer. Santore admitted causing more than $70,000 in losses.  Santore also devised a separate scheme to defraud the California unemployment system by collecting $16,200 in unemployment compensation benefits while working at the VO Group.

In addition to the prison terms, Judge Hillman sentenced both defendants to three years of supervised release. Restitution will be determined at a hearing to be scheduled.

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 these guilty pleas. He also thanked the N.J. Department of Labor, Benefit Payment Control Unit, for its assistance.

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

Defense counsel:

Giordano: Martin I. Isenberg Esq., Gibbsboro, New Jersey

Santore: Robert A. Mintz Esq., Newark

TRENTON, N.J. - A professional day trader today admitted personally making more than $1.2 million in illicit profits by repeatedly trading on inside information divulged to him in violation of confidentiality agreements, U.S. Attorney Paul J. Fishman announced.

Paul Petrello, 54, of Boca Raton, Florida, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an information charging him 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:

On numerous occasions between May 2010 and August 2013, Petrello and others, using inside information obtained by Petrello’s friend and business associate, Steven Fishoff, 58, of Westlake Village, and Fishoff’s employees, short sold securities of at least 13 public companies. 

For each of these offerings, Fishoff or one or more of the day traders that he employed —including his friend, Ronald Chernin, 67, of Oak Park, California, and his brother-in-law, Steven Costantin, 55, of Farmingdale, New Jersey — entered into confidentiality or “wall-crossing” agreements as representatives of Fishoff’s trading entities, whereby they agreed not to disclose or trade on inside information concerning the offerings and were “brought over the wall” for the narrow purpose of determining whether to purchase the offered securities. 

In breach of the wall-crossing agreements, Fishoff tipped Petrello about the confidentially marketed offerings by advising Petrello of the stock trading symbols of the companies, as well as the timing and sometimes the pricing of the upcoming offerings. Fishoff generally provided Petrullo with the inside information in code:  first, text messaging Petrello only the first two letters of the company’s stock trading symbol; and second, calling Petrello and telling him the last two letters of the symbol.

In addition, Fishoff also directed Petrello to pass inside information related to the stock offerings to an individual identified as “CC-1” in the information. At other times, Fishoff directly tipped CC-1 about an upcoming offering.

At Fishoff’s recommendation, Petrello short sold the stock of the public companies in anticipation of a drop in the stocks’ price when the stock offerings were disclosed to the public. Petrello and his conspirators traded through the accounts of their respective trading entities or through related accounts that they controlled. 

By trading on the nonpublic information, Petrello and his conspirators gained more than $3.9 million in profits over the course of the three-year scheme, with Petrello personally making more than $1.2 million.  Petrello split his profits with Fishoff, generally on a 50-50 basis, as compensation for the inside information that Fishoff provided.

The conspiracy count to which Petrello 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. Sentencing is scheduled for May 25, 2016.

Fishoff has been indicted, and Chernin and Costantin have been charged by complaint for their own involvement in the insider trading scheme. The charges and allegations contained in the indictment and complaint are merely accusations, and defendants are presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, for the investigation leading to today’s guilty plea.  He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office under the direction of Sanjay Wadhwa.

The government is represented by Assistant U.S. Attorney’s 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 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: David M. Rosenfield Esq. and Howard R. Elisofon Esq., New York

TRENTON, N.J. – Two women today admitted their involvement in schemes to bribe corrections officers to smuggle contraband to inmates inside the Essex County Jail, a federal pretrial detention facility, U.S. Attorney Paul J. Fishman announced.

Deidra Harrison, 51, of Newark, New Jersey, pleaded guilty before U.S. District Judge Mary L. Cooper to Count One of an indictment charging her with conspiring to commit extortion under color of official right. Karen Adrianzen, 38, of North Bergen, New Jersey, pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging her with conspiring to pay bribes to Essex County Jail corrections officers. Harrison and Adrianzen have both been released on bail.

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

In November 2013, Channel Lespinasse, 32, of Florham Park, New Jersey, a corrections officer at the Essex County Jail and Harrison’s daughter, agreed to deliver a cell phone to an inmate inside the Essex County Jail in exchange for $1,000. Harrison retrieved the cell phone and the $1,000 payment from an FBI undercover agent outside of the jail and passed the cell phone and the cash payment along to Lespinasse. Lespinasse then smuggled the cell phone into the jail and delivered it to the inmate.

On multiple occasions between September 2013 and May 2014, Jason Perez, 40, of Guttenberg, New Jersey, a federal pretrial detainee at the Essex County Jail, directed Adrianzen to pay cash bribes to various Essex County Jail corrections officers. At Perez’s direction, Adrianzen obtained contraband, including marijuana and cell phones, and delivered them to the corrections officers along with the cash bribes. After the corrections officers delivered the contraband to Perez, he ultimately sold the marijuana and cell phones to other inmates in the jail, who paid for the contraband via Western Union money transfers executed by their friends and family. Adrianzen and others collected the money transfers on Perez’s behalf.           

The charge for conspiring to commit extortion under color of official right, to which Harrison pleaded guilty, carries a maximum penalty of 20 years in prison and a $250,000 fine. The charge of conspiring to bribe public officials, to which Adrianzen pleaded guilty, carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing for Harrison and Adrianzen is scheduled for June 3, 2016 and May 31, 2016, respectively.

On Jan. 13, 2015, Lespinasse pleaded guilty to conspiring to commit extortion under color of official right and awaits sentencing on April 20, 2016. Perez pleaded guilty to conspiring to pay bribes to public officials on May 4, 2015 and awaits sentencing on March 1, 2016.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, and investigators with the Internal Affairs Division of Essex County Jail, under the leadership of Warden Roy Hendricks, with the investigation leading to today’s pleas.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division and Rob Frazer of the Organized Crime/Gangs Unit in Newark.

Defense counsel:

Harrison: Frank Guzman, Jersey City, New Jersey

TRENTON, N.J. – A part owner of Bayway Lumber, a Linden, New Jersey, company that sold commercial and industrial products to numerous public and private entities, today admitted his role in a scheme to defraud customers out of $708,386, U.S. Attorney Paul J. Fishman announced.

Robert R. Dattilo, 61, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with one count of conspiracy to commit mail and wire fraud.

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

From 2007 to November 2015, Dattilo conspired with others to defraud certain customers by engaging in fraudulent business practices, including overbilling, charging for more expensive items or larger quantities of items, and providing free items to employees of customers, then recouping the cost of the items (and additional profits) by overbilling and fraudulent billing.

At Dattilo’s direction, Bayway Lumber inflated the prices on items sold or intentionally failed to provide the prices called for in contractual agreements between Bayway Lumber and customers, including the University of Medicine and Dentistry of New Jersey (UMDNJ) and its successor entities – Rutgers University and University Hospital; the City of Elizabeth; and the New York Transit Authority. These methods included:

• Concealing the true cost of items to Bayway Lumber, sometimes by manually altering vendor invoices, in order to enable Bayway Lumber to bill UMDNJ higher mark-ups.

• Charging Elizabeth prices that did not apply the discounts called for by contracts.

• Consistently billing the Transit Authority for the most expensive items, such as doors, frames and door hardware, permitted by the contract, although Bayway Lumber was providing less-expensive items than what was ordered.

Dattilo also conspired to provide certain customers, such as the Philadelphia Housing Authority, Con Edison, the New York Department of Corrections and the City of Newark, with lower-quality lumber than the customers ordered and paid for. The lower-quality lumber, including “reject” lumber, did not meet certain industry specifications and was not of construction-grade quality, as required by contract. To conceal this product substitution scheme, Dattilo directed Bayway Lumber employees to spray paint or rearrange the lower-quality lumber sent to the customer entities in order to hide any markings on the lumber that would indicate that it was the lower-quality lumber. At Dattilo’s direction, Bayway Lumber also issued invoices to customers that falsely described the lower-quality lumber as the higher-quality lumber that the customers ordered.

Employees of some of Bayway Lumber’s customers, including Amtrak, the Plainfield Board of Education and a Bergen County company identified in the information as “Company 1,” were given a variety of items, including electronics, tickets to sporting events, merchandise and gift cards. Bayway Lumber then overbilled and fraudulently billed those customers to recoup the cost of the gifts, plus additional profits. Dattilo kept a running tally of how much Bayway Lumber overbilled and fraudulently billed those customers, which Dattilo referred to as the “Bank,” to ensure that Bayway Lumber recovered the full cost of the free items.

The charge to which Dattilo pleaded guilty carries a maximum potential penalty of 20 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 May 23, 2016.

U.S. Attorney Fishman credited special agents with the Office of Inspector General, U.S. Department of Housing and Urban Development, under the direction of Special Agent in Charge Christina Scaringi; special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi; and the Office of Inspector General, Amtrak, under the direction of Special Agent in Charge Robert Koons, as well as investigators of the U.S. Attorney’s Office, for conducting the investigation leading to today’s guilty plea.   

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

Defense counsel: Alain Leibman Esq., Princeton, New Jersey

TRENTON, N.J. – A New York attorney was sentenced today to 57 months in prison for defrauding two multi-national companies out of hundreds of thousands of dollars by fraudulently billing them for services that were never provided, U.S. Attorney Paul J. Fishman announced.      

After a two-week trial before U.S. District Judge Michael Shipp in June 2015, a jury deliberated for three hours before convicting Marijan Cvjeticanin, 52, of St. James, New York, of all nine counts of the indictment charging him with mail fraud. Judge Shipp imposed the sentence today in Trenton federal court.

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

From September 1996 to September 2012, Cvjeticanin worked for Wildes & Weinberg P.C., a New York law firm specializing in immigration law, first as a paralegal and then as an attorney. Among other clients, the firm represented Automatic Data Processing Inc. (ADP) and Broadridge Financial Solutions Inc. (Broadridge) in connection with various immigration law matters. Cvjeticanin was the case manager handling day-to-day tasks, such as preparing Department of Labor certifications and applications for permanent residency for certain foreign workers of those companies employed in the United States on a temporary basis.

The application process required ADP and Broadridge to place job advertisements in the geographic location where the relevant position was located and demonstrate that there were no minimally qualified United States citizens available to fill that position. Wildes & Weinberg arranged for an independent advertising agency to contract with ADP and Broadridge to place the advertisements.

At some point prior to 2010, Cvjeticanin caused ADP and Broadridge to replace the independent advertising agency with Flowerson Holdings Inc., a/k/a Flowerson Advertising (Flowerson). Unbeknownst to Wildes & Weinberg, ADP, or Broadridge, Cvjeticanin was the owner and principal of Flowerson. From that point until September 2012, Flowerson purportedly handled all of the certification advertisement obligations for ADP and Broadridge. In reality, Cvjeticanin did not place the majority of the advertisements as required and instead pocketed the monies paid to him by ADP and Broadridge.

In September 2012, Wildes & Weinberg learned through a routine audit of employee email accounts that Cvjeticanin owned and controlled Flowerson and fired him. The subsequent investigation revealed that between 2010 and September 2012, ADP and Broadridge collectively paid Flowerson approximately $579,000 for advertisements relating to permanent residency applications. Virtually all of the invoices that Flowerson submitted to ADP and Broadridge included charges for advertisements purportedly placed in Computer World magazine as well as advertisements placed in newspapers such as The New York Times, The Boston Globe, The Star-Ledger, The Seattle Times, and others. However, Cvjeticanin never placed the majority of advertisements. Instead, he kept the money for his personal benefit.

The investigation also revealed that from time to time the government would conduct audits of labor certifications submitted on behalf of ADP and Broadridge and request additional information from the filer, including copies of the print advertisements that had been placed. Cvjeticanin was responsible for gathering the print advertisements responsive to the government audit requests. Because Cvjeticanin had not placed most of the print advertisements, he was unable to provide the copies. Cvjeticanin took out advertisements after he received notice of the audit. Cvjeticanin then fraudulently superimposed those advertisements on a newspaper from another date and made a photocopy, which he submitted to the government. The photocopied submissions purported to show that the relevant advertisements had been placed on the appropriate dates.

In addition, during today’s sentencing proceeding, prosecutors asserted that Cvjeticanin had also been practicing law in the immigration courts after his conviction despite having been suspended from such practice by the U.S. Department of Justice, Executive Office for Immigration Review, Board of Immigration Appeals. Cvjeticanin was suspended from practice before the Board of Immigration Appeals, the immigration courts, and the Department of Homeland Security as of Nov. 2, 2015, because of his felony convictions in this matter. Cvjeticanin was also ordered to notify his clients of his suspension. Nevertheless, Cvjeticanin continued to represent clients before the immigration courts in New York City into 2016. Cvjeticanin is also currently the subject of disbarment proceedings in New York State.

In addition to prison time, Judge Shipp sentenced Cvjeticanin to three years of supervised release and ordered him to forfeit $668,977.

U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Terence S. Opiola, Newark Field Office, and the U.S. Department of State Diplomatic Security Service, New York Field Office, under the direction of Special Agent in Charge David Schnorbus, with the investigation leading to today’s sentencing.

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

Defense counsel: Lorraine Gauli-Rufo Esq., Verona, New Jersey; Thomas Ambrosio, Esq., Lyndhurst, New Jersey

More Than 150,000 Press Releases Stolen from Three Major Newswire Companies, Used to Generate Approximately $30 Million in Illegal Trading Profits

NEWARK, N.J. – Arkadiy Dubovoy, 51, of Alpharetta, Georgia, today admitted his role in an international scheme to hack into three business newswires and steal yet-to-be published press releases containing non-public financial information that was then used to make trades that allegedly generated approximately $30 million in illegal profits, New Jersey U.S. Attorney Paul J. Fishman announced.

Arkadiy Dubovoy pleaded guilty before U.S. District Judge Madeline Cox Arleo to Count One of an indictment charging him with conspiracy to commit wire fraud. He was arrested on Aug. 11, 2015, in connection with a federal indictment brought by the District of New Jersey charging five individuals – two computer hackers and three securities traders – in a large-scale, international conspiracy to hack and steal press releases containing confidential nonpublic financial information relating to hundreds of companies traded on the NASDAQ and NYSE from three newswires.

“Today, another defendant pleads guilty to his role in an international plot to loot non-public press releases from three major newswire companies and exploit them for millions in illicit proceeds,” U.S. Attorney Fishman said. “The conviction of Arkadiy Dubovoy, who admitted trading on the stolen information and splitting the profits with hackers in Ukraine, was made possible by the hardworking prosecutors and agents who unraveled this unprecedented scheme.”

“For more than three decades, the Secret Service has been a leader in investigating cybercrimes and protecting the U.S. financial infrastructure,” Joseph P. Clancy, Director of the U.S. Secret Service, said.  “This case embodies a vital part of the agency’s integrated mission and the success that we have achieved in investigating these highly complex crimes. There will always be inherent challenges in investigating cybercrime, but the Secret Service is committed to working with our law enforcement and global partners to safeguard the Nation’s financial infrastructure.”

In addition to Arkadiy Dubovoy, the 23-count New Jersey federal indictment charges Ivan Turchynov, 27, Oleksandr Ieremenko, 24, and Pavel Dubovoy, 32, all of Ukraine, and Igor Dubovoy, 28, of Alpharetta, Georgia. The defendants are all charged with wire fraud conspiracy, securities fraud conspiracy, wire fraud, securities fraud, and money laundering conspiracy. Additionally, Ivan Turchynov and Oleksandr Ieremenko are charged with computer fraud conspiracy, computer fraud, and aggravated identity theft. Igor Dubovoy pleaded guilty to his role on Jan. 20, 2016.

The U.S. Attorney’s Office for the Eastern District of New York (EDNY), in a related indictment charged four securities traders: Vitaly Korchevsky, 50, of Glen Mills, Pennsylvania, Vladislav Khalupsky, 45, of Brooklyn, New York and Odessa, Ukraine, Leonid Momotok, 47, of Suwanee, Georgia, and Alexander Garkusha, 47, of Cummings and Alpharetta, Georgia. The EDNY defendants are charged with wire fraud conspiracy, securities fraud conspiracy, securities fraud, and money laundering conspiracy.  On Dec. 21, 2015, Alexander Garkusha pleaded guilty to Count One of the EDNY indictment charging him with conspiracy to commit wire fraud.

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

Between February 2010 and August 2015, Turchynov and Ieremenko, computer hackers based in Ukraine, gained unauthorized access into the computer networks of Marketwired L.P. (Marketwired), PR Newswire Association LLC (PRN), and Business Wire. They used a series of targeted cyber-attacks, including “phishing” attacks and SQL injection attacks, to gain access to the computer networks. The hackers moved through the computer networks and stole press releases about upcoming announcements by public companies concerning earnings, gross margins, revenues, and other confidential and material financial information.

At one point, one of the hackers sent an online chat message in Russian to another individual stating, “I’m hacking prnewswire.com.”  In another online chat, Ieremenko told Turchynov that he had compromised the log-in credentials of 15 Business Wire employees.

The hackers shared the stolen releases with the traders using overseas computer servers that they controlled. In a series of emails, the hackers even shared “instructions” on how to access and use the overseas server where they shared the stolen releases with the traders, and the access credentials and instructions were distributed amongst the traders.  In an email, which was sent by one of the traders, the instructions for accessing the overseas server suggested that users conceal their Internet Protocol address when accessing the server as a precaution to avoid detection.  The traders created “shopping lists” or “wish lists” for the hackers listing desired upcoming press releases for publicly traded companies from Marketwired and PRN. Trading data obtained over the course of the investigation showed that, after the shopping list was sent, the traders and others traded ahead of several of the press releases listed on it. 

The traders generally traded ahead of the public distribution of the stolen releases, and their trading activities shadowed the hackers’ capabilities to exfiltrate stolen press releases. In order to execute their trades before the releases were made public, the traders sometimes had to execute trades in extremely short windows of time between when the hackers illegally accessed and shared the releases and when the press releases were disseminated to the public by the newswires, usually shortly after the close of the markets.  Frequently, all of this activity occurred on the same day.  Thus, the trading data often showed a flurry of trading activity around a stolen press release just prior to its public release.

The traders traded on stolen press releases containing material nonpublic information about the following publicly traded companies that included, among hundreds of others: Align Technology, Inc.; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign, Inc.

The traders paid the hackers for access to the overseas servers based, in part, on a percentage of the money the traders made from their illegal trading activities. The hackers and traders used foreign shell companies to share in the illegal trading profits. 

At today’s plea hearing, Arkadiy Dubovoy admitted that when he purchased the stolen press releases from the computer hackers operating in Ukraine, he knew they contained earnings announcements for publicly trading companies that had not yet been made public. Arkadiy Dubovoy also admitted that he sent the releases to either Korchevsky or Khalupsky so that they could review them and determine which trades would be profitable based on the stolen material information.

Arkadiy Dubovoy also admitted that he directed others, including Igor Dubovoy and Korchevsky, to manage the brokerage account he used as part of the scheme. He also admitted that he provided the hackers with access to at least one of his trading accounts so that they could confirm how much money was being made from the stolen information. According to Arkadiy Dubovoy, his arrangement with the hackers gave them approximately 50 percent of any profits resulting from the stolen press releases they provided.

The conspiracy charge to which Arkadiy Dubovoy pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations Division, under the direction of Director Joseph P. Clancy, and special agents from the Newark Field Office, under the direction of Acting Special Agent in Charge Jeffrey Wood, with the ongoing investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorneys Andrew S. Pak, Daniel Shapiro, David M. Eskew, and Nicholas Grippo of the Economic Crimes Unit, Computer Hacking & Intellectual Property Section, Assistant U.S. Attorney Svetlana M. Eisenberg of the General Crimes Unit, and Assistant U.S. Attorney Sarah Devlin of the Asset Forfeiture and Money Laundering Unit.

Defense counsel: Michael Critchley, Sr., Esq., Michael Critchley, Jr., Esq., Critchley, Kinum & Vazquez, LLC

NEWARK, N.J. – A Newark, New Jersey, man was charged today with committing five bank robberies in Union and Essex Counties from August 2015 through October 2015, U.S. Attorney Paul J. Fishman announced.

James Glenn, 59, of Newark, New Jersey, is charged by criminal complaint with five counts of bank robbery. He appeared this afternoon before U.S. Magistrate Judge Leda D. Wettre in Newark federal court and was detained.

According to the complaint, Glenn robbed the following New Jersey banks on the dates set forth below:

Bank

Location

Date

Connect One Bank

Union

Aug. 28, 2015

Hudson City Savings Bank

Roseland

Sept. 9, 2015

TD Bank

Orange

Sept. 25, 2015

Connect One Bank

Union

Sept. 28, 2015

Santander Bank

Union

Oct. 16, 2015

Glenn typically robbed the banks using notes that threatened physical harm and demanded cash. For instance, during the Sept. 9, 2015 robbery, Glenn handed the teller a handwritten note indicating, “[t]his is a robbery . . . [t]his is not your money so be careful – [n]o alarms [n]o dye pack I know them.  No one wants to get hurt so remember I know where you live.”  Also, during the spree, Glenn robbed the same Connect One Bank in Union, New Jersey, including threatening the same teller, on Aug. 28, 2015 and Sept. 28, 2015. He was arrested by the Union Township police department on Oct. 27, 2015.   

The bank robbery charges each carry a maximum potential penalty of 20 years in prison and a $250,000 fine.

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 the charges. He also thanked the Union Township, Roseland, and Orange police departments, as well as the Union County Prosecutor’s Office, the Essex County Prosecutor’s Office, and the NJ State Parole Board for their assistance.

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

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

Defense counsel: Leticia Olivera Esq., Assistant Federal Public Defender

NEWARK, N.J. – A Mercer County, New Jersey, man was sentenced to 255 months in prison for transporting an underage boy across state lines for the purpose of engaging in sexual activity, U.S. Attorney Paul J. Fishman announced.

Jayme Shannon, 53 of East Windsor, New Jersey, previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with interstate transportation of a minor for illicit purposes and doing so while being a registered sex offender. Judge Salas imposed the sentence today in Newark federal court. 

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

In September 2013, Shannon met a 15-year-old boy in the internet chat room “Chatavenue.com,” and continued to communicate with the victim in September and October 2013. 

On Oct. 14, 2013, Shannon arranged to meet the victim at the Skyview Motel in Fort Lee, New Jersey. After renting a motel room that morning, Shannon drove from New Jersey to New York, where he picked up the victim. Shannon then drove the victim from New York to the Skyview Motel and engaged in sexual conduct with the victim. Shannon was arrested later that day when Fort Lee police officers found him with the victim inside the motel.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi; the Bergen County Prosecutor’s Office, under the direction of Acting Prosecutor Gurbir S. Grewal; and the Fort Lee Police Department, under the direction of Chief Keith M. Bendul, with the investigation leading to today’s sentencing.

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

Defense counsel: Ron Bar-Nadav Esq. and Benjamin Morton Esq., Hackensack, New Jersey

NEWARK, N.J. – Dr. Labib E. Riachi, 47, of Westfield, New Jersey, and two companies that he owns and operates, Riachi, Inc. and Center for Advanced Pelvic Surgery, LLC, both based in Westfield, have agreed to pay $5.25 million to resolve allegations that they falsely billed federal health care programs for tests that were never provided, among other claims, U.S. Attorney Paul J. Fishman announced today.

The settlement resolves allegations that the defendants routinely billed Medicare and Medicaid for anorectal manometry, an invasive diagnostic test, and electromyography, another diagnostic test, even though most of the tests were never performed. In addition, the settlement resolves claims that the defendants submitted claims to Medicare for physical therapy services that should not have been paid because they were not performed by a qualified therapist.

The allegations resolved by today’s settlement were raised in a civil lawsuit that the government filed on Feb. 10, 2016, in Newark federal court charging the defendants with violating the False Claims Act, among other illegal conduct.

U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, and the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, with the investigation leading to the settlement.

The government is represented by Assistant U.S. Attorneys Bernard J. Cooney and Lucy Muzzy of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

U.S. Attorney 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 $645 million 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.

The claims settled by this agreement are allegations only, and there has been no determination of liability. The case is captioned United States v. Riachi, et al. (D.N.J.).

Defense counsel: Bruce Levy Esq. and Larry Lustberg Esq., Newark

NEWARK, N.J. – A Pakistani citizen today admitted laundering over $19.6 million on behalf of the perpetrators of a massive international computer hacking and telecommunications fraud scheme, U.S. Attorney Paul J. Fishman announced.

Muhammad Sohail Qasmani, 47, formerly of Bangkok, Thailand, pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with one count of conspiracy to commit wire fraud. He remains detained without bail.

“Thanks to the hard work of the prosecutors and agents on this case, Qasmani acknowledged his role in an international scheme that hijacked the telephone networks of U.S. companies and ran up millions in bogus charges,” U.S. Attorney Fishman said. “Today, he admitted moving over $19 million in illicit proceeds across 10 countries and ensuring the dialers and hackers who perpetuated the scheme received their cut.”

“The successful investigation of Qasmani is a testament to the dedication, hard work, and commitment of the men and women of the FBI, the Enforcement and Removal Operations of the U.S. Customs and Border Protection, and the State Department," said FBI-Newark Acting Special Agent in Charge Andrew Campi.

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

This massive international telecommunications fraud scheme, allegedly led by Noor Aziz, 53, of Karachi, Pakistan, involved unauthorized access to the computer systems – commonly known as PBX systems – that ran the internal telephone networks of numerous businesses and organizations in the United States. Foreign-based hackers targeted the telephone systems of the victim corporations and placed calls to those systems in an attempt to identify unused telephone extensions. Once the hackers identified unused extensions, they illegally reprogrammed the telephone systems so that they could be used to make unlimited long distance calls, all of which were ultimately charged back to the victim corporations.

The hacked telephone systems were then used to make calls to premium telephone numbers – such as purported chat lines, adult entertainment, and psychic hotlines – that generated revenue based on the calls’ duration and were set up and controlled by Aziz. In actuality, the numbers provided no actual services. Telephone company representatives who suspected fraudulent activity and called the numbers heard recordings of fake rings, fake password prompts, fake voicemail messages, music, or dead air on continuous loops.

In 2008, Qasmani, who operated a money laundering and smuggling business in Thailand, agreed to launder proceeds of the scheme for Aziz. In furtherance of the conspiracy, Qasmani established multiple bank accounts to receive the money generated by the illicit telephone traffic. Qasmani also paid the hackers and dialers who worked for Aziz to keep the scheme going.

Specifically, over nearly four years, Qasmani initiated money transfers to approximately 650 unique transferees, located in at least 10 countries, including the Philippines, India, Pakistan, Malaysia, China, the United Arab Emirates, Saudi Arabia, Indonesia, Thailand, and Italy.  Qasmani moved a total of approximately $19.6 million in fraud proceeds from November 2008 through Dec. 31, 2012. Qasmani kept laundering the money even after Aziz was arrested in connection with this scheme and later released by foreign authorities.

On Dec. 22, 2014, Special Agents of the FBI arrested Qasmani at Los Angeles International Airport after he arrived on a flight from Bangkok.  

The count of conspiracy to commit wire fraud carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for May 17, 2016.

Aziz was charged by indictment on June 20, 2012 and remains a fugitive. For more information, visit the FBI Cyber’s Most Wanted list. The charges and allegations against him are merely accusations, and he is considered innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Campi, with the investigation leading to today’s guilty plea.  He also thanked special agents with U.S. Immigration and Customs Enforcement's (ICE) Enforcement and Removal Operations (ERO) and U.S. Customs and Border Protection for their assistance in this case.

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

16-041                                                             ###

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

NEWARK, N.J. – A doctor with offices in Toms River, New Jersey, was indicted today for accepting thousands of dollars in cash bribes in exchange for referring his patients to two lab companies that performed blood and DNA testing, U.S. Attorney Paul J. Fishman announced. 

Vincent Destasio, 54, of Toms River, was indicted by a federal grand jury in Newark on one count of conspiracy to accept cash bribes and two substantive counts of accepting cash bribes. The indictment was unsealed today. Destasio will be arraigned on a date to be determined.

According to the indictment and statements made in court:

Destasio, a doctor of osteopathic medicine, was paid cash kickbacks by two sales representatives (Daniel Gilman and Kenneth Robberson) who were partners operating PROMED, which was a marketing and sales company specializing in blood testing laboratories and DNA laboratory testing companies. Gilman and Robberson have both pleaded guilty to an information charging them with conspiracy to bribe a physician and are awaiting sentencing.  

From March 2014 through May 2015, Gilman and Robberson solicited Destasio by paying him cash bribes for referring patient lab work to two separate laboratories for which Gilman and Robberson provided marketing and sales. One company (Company 1) was a blood testing laboratory company and the other was a DNA laboratory testing company (Company 2). Neither Company 1 nor Company 2 had any knowledge of or involvement in the kickback scheme.   

Gilman and Robberson received monthly commission checks from the two companies for referrals, for 10 percent of the reimbursements paid to the companies by various payors, including Medicare. After receiving the commission checks from the two companies, Gilman and Robberson would identify the number of patients Destasio had referred and pay him a cash kickback based on those patients. Destasio was paid a total of approximately $25,000 in cash bribes for his referrals. 

Destasio faces a statutory maximum prison sentence of five years on each count in the indictment and a maximum fine equal to the greatest of $250,000 or twice the gross gain or loss from the offense. He will also forfeit $25,000, if convicted. 

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, and special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the investigation leading to today’s indictment.

The government is represented by Assistant U.S. Attorney Michael H. Robertson of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

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

U.S. Attorney Fishman reorganized the health care fraud practice shortly after taking office, 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 $635 million 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: John J. Bruno Jr., Esq., Rutherford, New Jersey

Three other alleged gang members arrested and charged federally

NEWARK, N.J. – The alleged long-time leader of the Grape Street Crips will appear in court today on charges linking him to four murders, three attempted murders, and numerous other crimes as part of a racketeering conspiracy, U.S. Attorney Paul J. Fishman announced.

Corey Hamlet, a/k/a “C-Blaze,” a/k/a “Blaze,” a/k/a “Blizzie,” a/k/a “Castor Troy,” 39, of Belleville, New Jersey, was charged today in a fourth superseding indictment with RICO conspiracy, violent crimes in aid of racketeering, aiding and abetting the use of firearms in furtherance of crimes of violence, witness tampering, robbery, extortion, and drug trafficking. Three other men, Sean L. Scott Sr., a/k/a “Ali Rock, 45; Keon Bethea, a/k/a “Fat Boy,” 33; and Jamil Harrison, a/k/a “L-Mel,” 32, all of Newark, were arrested today and charged by criminal complaint with distribution of heroin and crack-cocaine. The four defendants are scheduled to appear today before U.S. Magistrate Judge James B. Clark III in Newark federal court.

“Nine months ago we announced the arrests of more than 70 members – including the No. 2 and No. 3 highest ranking members – of the Grape Street Crips, a violent street gang we alleged controls much of the heroin trade in northern New Jersey,” U.S. Attorney Fishman said. “Today, we are announcing charges against Corey Hamlet, the leader of that organization, in an indictment that spells out his alleged role in at least four homicides and three attempted homicides in furtherance of his control of this drug trafficking organization. The people of Newark should not have to endure that kind of violence or the fear that it breeds. I am hopeful that these arrests will make the streets of this city safer.”

“The FBI’s mission at the beginning of this investigation was to significantly disrupt the Grape Street Crips criminal enterprise operating in Newark,” Andrew Campi, FBI-Newark Acting Special Agent in Charge, said. “The federal indictment and arrest of its leader, Corey Hamlet, has brought us closer to our ultimate goal of dismantling one of the most violent street gangs in the city. This investigation is a tremendous example of the positive impact law enforcement has on the community and when federal, county, and local authorities join together with a common purpose.”

“Today we have taken a very dangerous and violent person off the street,” Carl J. Kotowski, Special Agent in Charge of the Drug Enforcement Administration’s New Jersey Division, said. “The people of Newark can be assured that the DEA will continue to pursue these violent predators.”

Hamlet’s indictment follows the coordinated takedown in May 2015 of 50 alleged members and associates of the Grape Street Crips, who were charged by criminal complaints with drug-trafficking, physical assaults, and witness intimidation. The charges – including today’s arrests – are the result of a long-running FBI and DEA investigation, in conjunction with the Essex County Prosecutor’s Office, the Newark Police Department and Essex County Sheriff’s Office Bureau of Narcotics.

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

Hamlet has allegedly served as the long-time leader of the New Jersey Grape Street Crips, even while serving prison sentences or being detained in federal or state correctional facilities.  The New Jersey Grape Street Crips – a local set of a nationwide street gang founded in Los Angeles – engage in drug-trafficking and other criminal activities to enrich themselves and fellow gang members. In addition to these criminal activities, the gang’s rules provide that members must retaliate against individuals who cooperate with law enforcement. Gang members routinely engage in acts of intimidation and violence against witnesses, individuals who are believed to be cooperating with law enforcement, and law enforcement officers themselves. As the gang’s leader, Hamlet allegedly participated in and authorized acts of violence against rivals, suspected cooperating witnesses, and even fellow gang members who were perceived as being disloyal.

After completing a previous federal sentence, Hamlet and other gang members began to extort Victim One. After Victim One refused to pay the extortion demands, Hamlet targeted Victim One and associates of Victim One for violence. In early 2013, Hamlet authorized Corey Batts, 30, of Newark, and Tony Phillips, of Newark, to murder Victim Two, in part, because Hamlet believed that Victim Two, a member of the New Jersey Grape Street Crips, had grown too close to Victim One. On May 3, 2013, Batts and Phillips, acting on Hamlet’s orders, allegedly shot Victim Two repeatedly in the head and dumped the victim’s body on a Newark street.

In August 2013, Hamlet authorized Batts to murder Victim One. In October 2013, Hamlet met with Victim One at the Mall at Short Hills in Millburn, New Jersey, in a meeting that had been set-up by Victim Five, a member of the New Jersey Grape Street Crips who was a close associate of Victim One and who attempted to broker a truce between Hamlet and Victim One.

After the Short Hills meeting, Hamlet used a social media account to post a report from the Essex County Prosecutor’s Office purportedly indicating that Victim One had provided a statement to law enforcement. Just three days after Hamlet’s social media post, Batts and other gang members – acting on Hamlet’s orders – repeatedly shot and nearly killed Victim One and Victim Four, a bystander who was inside Victim One’s car.

Following the attempted murder of Victim One, Hamlet and other gang members perceived that Victim Five had been disloyal by attempting to put an end to the feud between Hamlet and Victim One. In November 2013, Aaron Terrell, 24, and Rashan Washington, 26, both of Newark, murdered Victim Five. Acting on Hamlet’s orders, Washington lured Victim Five into a Jeep Cherokee and then purposely left Victim Five alone, while Terrell shot Victim Five once in the head.

In November 2013, Hamlet allegedly told a conspirator that Victim Six, who was a relative of Victim One, had to be murdered. On March 3, 2014, Hamlet and another conspirator pulled up to a car being driven by Victim Six. Although Hamlet aimed a firearm at Victim Six and the car’s other occupants, Victim Six pulled off before any shots were fired. A short time later, however, Hamlet’s conspirator found Victim Six, and a car chase ensued. The chase concluded when Victim Six’s car crashed into other vehicles at Irvine Turner Boulevard and Spruce Street in Newark, and Hamlet’s conspirator fired numerous shots in the direction of Victim Six’s vehicle. Victim Six was shot and Victim Seven, a passenger in Victim Six’s car, was killed. Victim Eight, an innocent bystander who was a passenger in one of the vehicles crashed into at the intersection, was shot in the head and killed.

In addition to orchestrating these and other acts of violence, Hamlet conspired with other gang members to distribute 280 grams or more of crack-cocaine, conspired to distribute heroin, was involved in the extortion and robbery of other individuals, and threatened individuals whom he believed to be cooperating with law enforcement.

On each of the charges of RICO conspiracy, conspiracy to distribute crack-cocaine, and using firearms in furtherance of crimes of violence, Hamlet faces a maximum penalty of life in prison. The first count of using a firearm in furtherance of a crime of violence carries a mandatory minimum term of 10 years, while the second such count carries a mandatory minimum term of 25 years, which must be imposed consecutively to the first count. On the six counts of violent crimes in aid of racketeering, Hamlet faces terms of imprisonment ranging from three to 20 years.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi, and special agents of the DEA, under the direction of Special Agent in Charge Carl J. Kotowski, for the investigation leading to the charges. Fishman 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 A. Ambrose; and the Essex County Sheriff’s Office under the direction of Armando B. Fontoura, for their work on the investigation. He also thanked officers assigned to the Safe Streets Task Force from the Orange and East Orange police departments and the Essex County Department of Corrections.

The government is represented by Assistant U.S. Attorneys Osmar J. Benvenuto and Barry A. Kamar of the OCDETF/Narcotics Unit 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, a partnership between federal, state and local law enforcement agencies.  The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. 

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

NEWARK, N.J. – U.S. Attorney Paul J. Fishman announced today that the government has filed a complaint against a Union County, New Jersey, doctor and his medical practice companies for knowingly submitting millions of dollars in false claims to Medicare and Medicaid for thousands of diagnostic tests that were never performed and for physical therapy services performed by unqualified personnel.

The civil complaint, filed today in Newark federal court, charges Dr. Labib E. Riachi, 47, of Westfield, New Jersey, and two companies that he owns and operates, Riachi, Inc. and Center for Advanced Pelvic Surgery, LLC, both based in Westfield, with violating the False Claims Act, among other illegal conduct.  

According to the complaint:

The defendants routinely billed Medicare and Medicaid for anorectal manometry, an invasive diagnostic test, and electromyography, another diagnostic test, even though most of the tests were never performed. In addition, the defendants submitted claims to Medicare for physical therapy services that should not have been paid because they were not performed by a qualified therapist. This scheme resulted in millions of dollars of reimbursement that would not have been paid but for the defendants’ misconduct.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, and the U.S. Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the investigation leading to the complaint.

The government is represented by Assistant U.S. Attorneys Bernard J. Cooney and Lucy Muzzy of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

U.S. Attorney 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 $640 million 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: Bruce Levy Esq. and Larry Lustberg Esq., Newark

TRENTON, N.J. – A Trenton man who was found in possession of 143 grams of heroin and a loaded firearm pleaded guilty today to narcotics possession, U.S. Attorney Paul J. Fishman announced.

Dorian Brown, 36, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with possession with intent to distribute heroin. 

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

On June 4, 2014, Brown, who had been the target of an investigation led by detectives from the Mercer County Prosecutor’s Office, Special Investigations Unit, and officers from the Trenton Police Department, in cooperation with the U.S. Drug Enforcement Administration (DEA), was apprehended during the execution of search warrants on his car, as well as his Trenton home. Law enforcement seized approximately 130 grams of heroin from Brown’s home, where detectives also discovered a loaded semi-automatic handgun. An additional 13 grams of heroin was seized from Brown’s car.

The narcotics charge to which Brown pleaded guilty carries a maximum penalty of 20 years in prison and a $1 million fine. Sentencing is scheduled for May 17, 2016.

U.S. Attorney Fishman credited special agents of the DEA, under the direction of Special Agent in Charge Carl J. Kotowski, and detectives of the Mercer County Prosecutor’s Office, Special Investigations Unit, under the direction of Acting Prosecutor Angelo J. Onofri, with the investigation leading to today’s guilty plea.  He also thanked officers of the Trenton Police Department under the direction of Police Director Ernest Parrey 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: Brian P. Reilly, Esq., Assistant Federal Public Defender, Trenton

TRENTON, N.J. – The former in-house counsel of an Ocean County, New Jersey-based home health care company was sentenced today to 18 months in prison for using his attorney trust account to steal more than $2.6 million from his employer, U.S. Attorney Paul J. Fishman announced.

Matthew S. Neugeboren, 39, of Manalapan, New Jersey, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of wire fraud and one count of subscribing to a false tax return. Judge Cooper imposed the sentence today in Trenton federal court.

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

From 2006 through 2013, Neugeboren was in-house counsel for Company A, a home health care company in Ocean County. As such, Neugeboren maintained an attorney trust account to pay for Company A’s expenses. To cover those expenses, Neugeboren requested checks and wire transfers be made from Company A’s bank accounts into his attorney trust account.

As part of the scheme, Neugeboren caused Company A to transfer more money into his attorney trust account than was necessary to cover company expenses. Neugeboren admitted that he used the additional money for his personal benefit, including gambling. Neugeboren admitted that from January 2008 through December 2012, he stole $2,644,912 from Company A.

In addition to the wire fraud scheme, Neugeboren knowingly and willfully filed a false tax return that failed to include approximately $630,000 in gross income that he received in calendar year 2011 from his scheme to defraud Company A.

In addition to the prison term, Judge Cooper ordered Neugeboren to serve three years of supervised release, entered a forfeiture order of $1,404,963 and ordered him to pay restitution of $1,404,963 to the victim company and $474,814 to the IRS.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi, and special agents 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 Molly Lorber of the U.S. Attorney’s Office Criminal Division in Trenton. 

Defense counsel: Justin P. Walder Esq., Roseland, New Jersey

TRENTON, N.J. – A former resident of Colorado was sentenced today to 24 months in prison for her involvement in a conspiracy to illegally transfer firearms from Colorado to a felon in New Jersey, United States Attorney Paul J. Fishman announced.

Krystel Lopez, 28, of Greeley, Colorado, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to one count of an indictment charging her with conspiracy to illegally transfer firearms interstate. Judge Wolfson imposed the sentence today in Trenton federal court.

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

Between February and April 2013, Lopez purchased an assault rifle and a handgun in Colorado. Later in April 2013, she mailed both the assault rifle and the handgun to the business address of a known felon in New Jersey, who was prohibited from possessing such weapons. 

In addition to the prison term, Judge Wolfson sentenced Lopez to two years of supervised release. 

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

The government is represented by Assistant U.S. Attorney Courtney Howard and Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.

Defense counsel: Michael Calabro Esq., Newark

NEWARK, N.J. – Five men who were arrested in Passaic County, New Jersey, with a combined 55 kilograms of heroin and cocaine in their possession appeared in Newark federal court today, U.S. Attorney Paul J. Fishman announced.

Edwin Alamo Jr., 21, of Bronx, New York, Sauro D. Estevez Figueredo, 48, of Miami, Florida, Emmanuel Gonzalez, 31, of Bronx, New York, Alberto Mora, 52, of Morriston, Florida, and Porfirio Peralta-Nunez, 37, of Jersey City, New Jersey, are each charged by criminal complaint with one count of conspiracy to distribute and possess with intent to distribute a kilogram or more of heroin. Figueredo and Mora are also charged with one count of conspiracy to distribute and possess with intent to distribute five kilograms or more of cocaine.

All five defendants appeared this afternoon before U.S. Magistrate Judge James B. Clark III and were remanded into custody.

According to the complaint filed today:

On Feb. 5, 2016, law enforcement observed a tractor trailer, driven by Figueredo and Mora, parked at an intersection near a store in Clifton, New Jersey. That afternoon, Gonzalez and Alamo drove to the tractor trailer and left with a suitcase given to them by Mora. Later, Peralta-Nunez arrived at the tractor trailer with two empty bags and left shortly afterwards with the bags filled.

Subsequent traffic stops later revealed 22 kilograms of heroin in Gonzalez and Alamo’s possession and 13 kilograms of heroin in Peralta-Nunez’s possession. Law enforcement also found 20 kilograms of cocaine still remaining at the tractor trailer, resulting in a total of 55 kilograms of seized narcotics. All five defendants were arrested that day.

The drug distribution conspiracy charges each carry a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison and a $10 million fine.

The government is represented by Assistant U.S. Attorney Meredith Williams and Mary Toscano, Deputy Chief of the General Crimes Unit of the U.S. Attorney’s Office in Newark.

U.S. Attorney Fishman credited special agents of the Drug Enforcement Administration (DEA), under the direction of Special Agent in Charge Carl J. Kotowski in Newark, with the investigation leading to today’s charges.

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

Defense Counsel:

Alamo: Chester Keller Esq., First Assistant Public Defender, Newark

Figueredo: Michael D’Alessi Esq.

Gonzalez: James Murphy Esq., Princeton, New Jersey

Mora: David Schafer Esq., Assistant Federal Public Defender, Trenton

Peralta-Nunez: Brian Neary., Esq., Hackensack, New Jersey

NEWARK, N.J. – A former corrections officer with the Essex County Correctional Facility was convicted today by a federal jury for sexually assaulting a pretrial detainee and then lying about it to investigators, U.S. Attorney Paul J. Fishman announced.

Shawn D. Shaw, 43, of Newark, was convicted of both counts of an indictment charging him with depriving an individual of rights under color of law and obstruction of justice. He was convicted following a seven-day trial before U.S. District Judge Esther Salas in Newark federal court. The jury deliberated for two days before returning the guilty verdict. Judge Salas revoked the defendant’s bail and ordered him into custody following the verdict.

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

Shaw was the only officer on duty in the female unit during the night of a snow blizzard on Dec. 28, 2010. During the night, Shaw made sexually explicit comments to the victim. Although she rejected his advances, records show that in the middle of the night, Shaw opened the victim’s cell door. The victim testified that Shaw entered her cell, and despite her saying “stop” and “no,” Shaw raped her. Expert testimony, including DNA analysis, corroborated the victim’s testimony that Shaw was her assailant.

When investigators questioned Shaw about the attack, he lied and intentionally omitted information from his statement in order to obstruct the investigation. Specifically, Shaw falsely stated that he did not make sexual comments to the detainee or enter the victim’s cell.

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. He also thanked the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray, for its assistance.

The charge of deprivation of rights under color of law carries a maximum potential penalty of life in prison. The obstruction of justice count carries a maximum potential penalty of 20 years in prison. Each count also carries a maximum $250,000 fine. Sentencing is set for May 16, 2016.

The government is represented by Criminal Division Chief Thomas Eicher and Assistant U.S. Attorney Shana Chen of the U.S. Attorney’s Office in Newark, with assistance from Trial Attorney Shan Patel of the Justice Department’s Civil Rights Division.

Defense counsel: Mark A. Fury Esq., Mount Holly                                                                                                                          

NEWARK, N.J. - A New York man admitted today that he stole more than $340,000 in fraudulently obtained income tax refund checks issued by the United States, U.S. Attorney Paul J. Fishman announced. 

Isaias Hernandez, 40, of Bronx, New York, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to Count Three of an indictment charging him with theft of government funds.

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

Hernandez admitted stealing $342,590 from February 2012 through May 2012.  Many of the fraudulently obtained income tax refund checks were deposited, with the proceeds withdrawn, in Hamilton, New Jersey.

Stolen Identity Refund Fraud (SIRF) is a common type of fraud committed against the United States government that results in more than $2 billion in losses annually. SIRF schemes generally share a number of hallmarks.  Perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico.  They complete IRS-1040 tax return forms using the fraudulently obtained information and falsifying wages earned, taxes withheld and other data, always ensuring that fraudulent tax return generates a refund.  The perpetrators then direct the U.S. Treasury Department to mail the refund checks to locations they control or can access.  In some cases, they bribe mail carriers to remove the refund checks from their mail routes.  With the fraudulently obtained refund checks in hand, the perpetrators generate cash proceeds by depositing the checks into bank accounts they control.

Hernandez admitted that he knew that the 48 double-endorsed tax refund checks he and others deposited into a bank account under his direct control did not belong to him or to the company named on the bank account.  He admitted to personally withdrawing from that bank account $98,020 in cash and $99,700 in bank checks made out to an automobile auction.  Hernandez admitted using money from the bank account for personal expenses, including but not limited to payments for an insurance school class and the purchase of liquor and clothing.  He also admitted that he knew that the checks were issued by the IRS and the United States Treasury, and that it was illegal to deposit the tax refund checks and use the proceeds for his own benefit. 

Hernandez was originally charged with six co-defendants (Luis Pena, Lourdes Ortiz, Raymundo Hernandez and Gloria Rivera of Bronx; Wellington Feliz and Fausto Bernard of Newark) in a criminal complaint alleging conspiracy to commit theft of government funds, relating to a SIRF scheme that caused more than $2.6 million in losses to the United States government.  Of the originally charged defendants, four (Pena, Rivera, Ortiz and Raymundo Hernandez) pleaded guilty to and have been sentenced for their roles in the conspiracy, and one pleaded guilty to and was sentenced for a misprision of felony related to his failure to report the conspiracy (Bernard).  One additional conspirator, Angel Fernandez of Newark, was charged in a separate complaint and also pleaded guilty to charges regarding his participation in the conspiracy. All have been ordered to pay restitution to victims and forfeiture to the United States.  The remaining defendant, Feliz, who is named in the indictment with Hernandez, is a fugitive.

The charge to which Hernandez pleaded guilty carries a maximum penalty of 10 years in prison and a fine of the greater of $250,000, twice the gross amount of any pecuniary gain that any persons derived from the offense; or twice the gross amount of any pecuniary loss sustained by any victims of the offense. 

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; special agents of the U.S. Secret Service, under the direction of Acting Special Agent in Charge Kenneth Pleasant; and special agents of the U.S. Postal Service – Office of the Inspector General, under the direction of Special Agent in Charge Eileen Neff; and inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge James R. Ball, with the investigation leading to today’s guilty plea.

Sentencing before U.S. District Judge Madeline Cox Arleo is scheduled for May 2, 2016.

The government is represented by Assistant U.S. Attorneys Sara F. Merin and Joyce M. Malliet of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel:   Stephen Turano, Esq., Newark, N.J.

NEWARK, N.J. - A Seminole, Florida, man today admitted using phony invoices from his transportation company to obtain $220,000 from a New Jersey-based factoring business, U.S. Attorney Paul Fishman announced.

Karl Stehlin, a/k/a “Mark Sawyer,” 60, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to Count One of an indictment charging him with wire fraud. 

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

Stehlin admitted that from June 2014 through September 2014, he defrauded a Bergen County, New Jersey, factoring business that purchased accounts receivable in return for short term financing. Stehlin created a bogus Idaho-based company, Sawyer Express Transportation Inc., and emailed accounts receivable invoices to the factoring company for transportation services that were never provided. As a result, Stehlin was able to defraud the factoring company out of $220,000 in advance payment on those invoices. 

During his plea hearing, Stehlin also admitted using the same methods to defraud a Glendale, California, factoring business out of $127, 953.34 and a Las Vegas factoring business out of $524,025.28.

The wire fraud charge to which Stehlin pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 24, 2016. 

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s plea. He also thanked special agents of the FBI Tampa Division, under the direction of Special Agent in Charge Paul Wysopal, for their assistance. 

The government is represented by Assistant U.S. Attorneys Lakshmi Srinivasan Herman and Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit and Acting Chief Barbara Ward of the Asset Forfeiture and Money Laundering Unit in Newark.

Defense counsel: Michael Koribanics Esq., Clifton, New Jersey

CAMDEN, N.J. - A previously convicted sex offender from Bellmawr, New Jersey, today admitted possessing images of child pornography that he acquired through social media and email correspondence with two boys, U.S. Attorney Paul J. Fishman announced.

Robert Pelle, 50, pleaded guilty before Chief U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging him with one count of knowingly possessing child pornography.

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

From April 2013 through July 2013, Pelle was still on supervised release and state parole after being incarcerated for possession of child pornography and related state charges from 2007. Pelle admitted today that in July 2013, he used a public library computer to access social networks and sexually explicit websites, which he was not permitted to do under conditions of his parole.

In addition, Pelle admitted that from April 2013 through July 2013, he used social media accounts and email to pose as a minor and communicate with two young boys. During the correspondence, Pelle asked one boy to send nude images of himself, which he did. Pelle also admitted sending one of those images to the other boy.

As a previously convicted sex offender, Pelle faces a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of 20 years in prison, a lifetime of supervised release and a $250,000 fine. Pelle also faces an additional five years in prison because the crime was committed while on federal supervised release. Sentencing is scheduled for May 6, 2016.

U.S. Attorney Fishman credited agents of the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge William F. Sweeney Jr. in Philadelphia, with the investigation leading to today’s plea. He also thanked the parole officers of the New Jersey Department of Parole, under the direction of Chairman James Plousis, and detectives from the Bellmawr Police Department, under the direction of Chief William Walsh, for their assistance.

The government is represented by Assistant U.S. Attorney Sara A. Aliabadi of the U.S. Attorney’s Office in Camden.

Defense counsel: Lori M. Koch, Esquire and Edward J. Crisonino, Esquire, Camden

NEWARK, N.J. – An Elizabeth, New Jersey, man was sentenced today to 63 months in prison for his role in a conspiracy to smuggle approximately three kilograms of cocaine from Haiti into the United States, U.S. Attorney Paul J. Fishman announced.

Schirmer Monestime, 39, was previously convicted on an indictment charging him with one count of conspiracy to distribute cocaine following a four-day trial before U.S. District Judge Susan D. Wigenton. The jury deliberated for four hours before returning the guilty verdict. Monestime was originally arrested and charged by complaint on March 5, 2013. Judge Wigenton imposed the sentence today in Newark federal court.

According to the indictment and evidence at trial:

On Feb 28, 2013, while conducting routine examinations of express mail parcels arriving from Haiti, law enforcement examined a parcel addressed to Bobby Lewis, 59, of Elizabeth. The examination revealed a package containing six large picture frames filled with a powdery-white substance that field-tested positive for cocaine. The net weight of the cocaine in the picture frames was approximately three kilograms.

Law enforcement officers replaced the drugs in the parcel with fake cocaine. On March 4, 2015, an undercover postal inspector delivered the parcel to Lewis, who signed for it at his Elizabeth address. Law enforcement surveillance observed Lewis take the parcel to a nearby parking lot and signal an approaching vehicle driven by Monestime. Although Monestime did not stop to receive the parcel, he later admitted that he intended to do so.

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

Charges against Lewis are still pending. The charges and allegations against him are merely accusations, and he is presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of U.S. Department of Homeland Security-Homeland Security Investigations (DHS-HSI), under the direction of Special Agent in Charge Terence S. Opiola, and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s sentencing.

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

Defense counsel: Cynthia H. Hardaway Esq., Montclair, New Jersey.

TRENTON, N.J. – A New York man was sentenced today to 51 months in prison for his role in one of the largest credit card fraud schemes ever charged by the Justice Department, U.S. Attorney Paul J. Fishman announced.

Shafique Ahmed, 55, of Floral Park, New York, previously pleaded guilty before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court to an information charging conspiracy to commit bank fraud. U.S. District Judge Anne E. Thompson imposed the sentence today in Trenton federal court.

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

Ahmed and others were originally charged in February 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. Members of the conspiracy doctored credit reports to pump up the spending and borrowing power associated with the cards. They then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts – causing more than $200 million in confirmed losses to businesses and financial institutions.

The scheme involved a three-step process in which the defendants would make up a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus; pump up the credit of the false identity by providing false information about that identity’s creditworthiness to those credit bureaus; finally, run up large loans.

The scope of the criminal fraud enterprise required Ahmed and his conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments and post office boxes, which they used as the mailing addresses of the false identities.

Ahmed admitted that he and others helped obtain credit cards in the name of third parties – many of which were fictional – then directed the credit cards to be mailed to addresses controlled by members of the conspiracy. He also admitted they knew the cards would be used fraudulently at businesses.

In addition to the prison term, Judge Thompson sentenced Ahmed to five years of supervised release and entered a forfeiture order for $1 million against him.

U.S. Attorney Fishman praised special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Richard M. Frankel, for the investigation leading to the guilty pleas, as well as postal inspectors, under the direction of Postal Inspector in Charge Marie L. Kelokates, and special agents of the U.S. Secret Service, Newark Field Office, under the direction of Acting Special Agent in Charge Kenneth Pleasant. He also thanked the U.S. Social Security Administration for its role in the investigation.

The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Zach Intrater of the U.S. Attorney’s Office Criminal Division and Barbara Ward of the office’s Asset Forfeiture and Money Laundering 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: Joseph Giaramita Esq., Brooklyn

TRENTON, N.J. - A Paterson, New Jersey, man was sentenced today to 156 months in prison for his role as a primary heroin supplier for a criminal street gang that used threats, intimidation and violence to maintain control of the illegal heroin trade in Atlantic City, New Jersey, U.S. Attorney Paul J. Fishman announced.

Mark Frye, 35, previously pleaded guilty before U.S. District Judge Anne E. Thompson to a superseding information charging him with conspiracy to distribute more than one kilogram of heroin. Judge Thompson imposed the sentence today in Trenton federal court.

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

Frye and Maurice Thomas, 34, of Patterson, worked together in a sophisticated drug distribution scheme which was based in the Presidential Towers apartment complex in Paterson.  

Law enforcement agents obtained several wiretaps over a period of six months and recorded thousands of phone calls and text messages, including calls between Frye and “Dirty Block” leader Mykal Derry, 35, of Atlantic City, and Tyrone Ellis, 33, of Galloway, New Jersey, two Atlantic City heroin dealers. In addition, FBI agents conducted surveillance of drug meetings at the apartment complex in Paterson and observed and photographed Frye meeting with both Derry and Ellis on numerous occasions.

Frye, along with Thomas, obtained large quantities of pre-packaged heroin from major drug suppliers in the Paterson area and then supplied the drugs to numerous customers, routinely selling thousands of dollars’ worth of pre-packaged heroin to Derry and Ellis.  

On Feb. 17, 2013, Frye was arrested by troopers from the New Jersey State Police after they seized an Audi Sedan he was driving and found a bag containing 200 “bricks” of heroin (each brick contained 50 individual packets of heroin, for a total of approximately 10,000 packets of heroin). Frye was able to make bail within 24 hours, but was ultimately arrested in March 2013 by FBI agents on the federal drug conspiracy charge. Sentencing in the state case in Passaic County Superior Court is still pending.

At his plea hearing, Frye admitted that he supplied at least 1, 200 bricks of heroin as part of the conspiracy. The wire recordings of Frye’s numerous calls and text messages with Derry and Ellis, as well as the trial testimony of a cooperating witness with firsthand knowledge of Frye’s drug trafficking activities, establish that Frye supplied heroin on a daily basis for at least six months between October 2012 and March 2013.

In addition to the prison term, Judge Thompson sentenced Frye to serve eight years of supervised release.

Thomas pleaded guilty on Sept. 18, 2014 to conspiracy to distribute more than one kilogram of heroin and awaits sentencing. Ellis pleaded guilty on Nov. 10, 2015 to conspiracy to distribute more than 100 grams of heroin and awaits sentencing. Derry, who was convicted at trial for drug conspiracy and weapons charges, was sentenced Jan. 7, 2015 to a lifetime in prison.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang (Safe Streets) Task Force, with the investigation leading to today’s sentencing.

He also thanked the N.J. State Police, the Atlantic County Sheriff’s Office, the Northfield Police Department, the Vineland Police Department, the Brigantine Police Department, and the Millville Police Department for their contributions.

The government is represented by Assistant U.S. Attorneys Patrick Askin and Justin Danilewitz of the U.S. Attorney’s Office in Camden and Special Assistant U.S. Attorney Edmund Mallqui-Burgos of the Atlantic County Prosecutor’s Office.

Defense counsel:  Michael Engle Esq., Philadelphia 

CAMDEN, N.J. - Two Burlington County men who teamed up to rob multiple South Jersey banks between September 2013 and January 2014 were both sentenced today to 108 months in prison, U.S. Attorney Paul J. Fishman announced. 

Shalir Hall, 22, of Edgewater Park, New Jersey, previously pleaded guilty before U.S. District Judge Jerome B. Simandle to an information charging him with nine counts of bank robbery. David Glenn, 24, of Burlington Township, New Jersey, previously pleaded guilty before Judge Simandle to an information charging him with seven counts of bank robbery. Judge Simandle imposed both sentences today in Camden federal court.

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

Hall and Glenn robbed the following New Jersey banks on the dates set forth below:

Bank

Location

Date

Participants

Beneficial Savings Bank

Willingboro

Sept. 27, 2013

Hall

Beneficial Savings Bank

Willingboro

Nov. 14, 2013

Hall, Glenn

Beneficial Savings Bank

Willingboro

Nov. 26, 2013

Hall, Glenn

PNC Bank

Mount Laurel

Nov. 29, 2013

Hall, Glenn

3rd National Bank

Delran

Dec. 12, 2013

Hall, Glenn

Roma Bank

Delran

Dec. 12, 2013

Hall, Glenn

Columbia Savings Bank

Maple Shade

Dec. 17, 2013

Hall

TD Bank

Bellmawr

Jan. 8, 2014

Hall, Glenn

PNC Bank

East Windsor

Jan. 8, 2014

Hall, Glenn

Hall robbed the Beneficial Savings Bank in Willingboro on Sept. 27, 2013, by threatening and intimidating bank employees, demanding money and then fleeing the bank.  Hall then joined forces with Glenn, and the two went on to commit seven additional robberies in New Jersey – taking turns alternating between going into the banks and staying in the getaway vehicle. Hall committed the Dec.17, 2013 robbery of Columbia Savings Bank on his own.

In addition to the prison terms, Judge Simandle sentenced both Hall and Glenn to three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agents in Charge Richard M. Frankel and William F. Sweeney Jr. in Newark and Philadelphia, respectively, with the investigation leading to the sentences.

He also credited the Camden County Prosecutor’s Office and the Burlington County Prosecutor=s Office; the Burlington County Sheriff’s Department Warrant Unit; and the U.S. Marshals Service New York/New Jersey Regional Fugitive Task Force; as well as the East Windsor Township Police Department, Willingboro Police Department, Maple Shade Police Department, Delran Township Police Department, Mount Laurel Police Department, Philadelphia Police Department and the Hazelton, Pennsylvania Police Department for their work in this case.

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

Defense counsel:

Hall: Gina A. Capuano, Esquire, Cherry Hill, New Jersey

Glenn: Lisa Evans Lewis Esq., Assistant Federal Public Defender, Camden

NEWARK, N.J. – A Middlesex County, New Jersey, man will appear in federal court today to face charges that he used eBay to sell more than $200,000 worth of Barnes and Noble merchandise he shoplifted using a “booster bag,” U.S. Attorney Paul J. Fishman announced.                  

Dominick James Izzo, 49, of Piscataway, New Jersey, and Port Orange, Florida, is charged by criminal complaint with one count of transportation of stolen goods. He appeared this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court and was released on a $250,000 unsecured bond.

According to the complaint:

Izzo allegedly stole merchandise from Barnes & Noble stores in New Jersey, Florida and elsewhere using a “booster bag” to evade anti-theft alarms. He then listed the stolen merchandise on eBay using nominee seller accounts to conceal his identity. Izzo accepted payment for the stolen merchandise from purchasers via nominee PayPal accounts. Once Izzo received funds via domestic wire transfer from the purchasers, he shipped the stolen merchandise from New Jersey and Florida to the purchasers in several different states.

The transportation of stolen goods charge is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine.  

U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, 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 Lakshmi Srinivasan Herman of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

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

C. Tate George, former NBA basketball player and the CEO of purported real estate development firm The George Group, was sentenced today to 108 months in prison for his role in orchestrating a $2 million investment fraud scheme, announced U.S. Attorney Paul J. Fishman for the District of New Jersey.

After a three-week trial before U.S. District Judge Mary L. Cooper September 2013, a jury deliberated for four hours before convicting George, 47, of Newark, New Jersey, of all of four counts of the indictment. Judge Cooper imposed the sentence today in Trenton federal court.

“Those who perpetrate Ponzi schemes shamelessly trade on relationships with those who trust them,” U.S. Attorney Fishman said.  “In this case, George relied on his sports stardom to attract unwitting investors. His crimes justified today’s lengthy sentence.”

“By shamelessly cashing in on his celebrity C. Tate George stole $2 million from investors who trusted him as a former NBA athlete,” said Special Agent in Charge Richard M. Frankel for the FBI’s Newark Division.  “George used the money to pay other investors in the Ponzi-style scheme and lined his pockets with the rest, funding extensive renovations on his home, paying for his daughter’s sixteenth birthday party and producing a reality video about himself.”

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

George, a former player for the New Jersey Nets and Milwaukee Bucks professional basketball teams, held himself out as the CEO of The George Group and claimed to have more than $500 million in assets under management.  He pitched prospective investors, including several former professional athletes, to invest with the firm and told them their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Connecticut and New Jersey.  George represented to some prospective investors that their funds would be held in an attorney trust account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and 2011, which he deposited in both the firm’s and his personal bank account.  Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi-scheme fashion, as well as paying for his daughter’s sixteenth birthday party, extensive renovations on his New Jersey home (that has since been foreclosed), the mortgage on a New Jersey home, the mortgage on a Florida home, taxes to the Internal Revenue Service (IRS) and traffic tickets.  The defendant gave money to family members and friends.  He also spent $2,905 for a reality video about himself – a “sizzle reel” for “The Tate Show” – which was made available on YouTube.  The George Group had virtually no income-generating operations.

During the sentencing proceeding, prosecutors asserted George had presented the court with fraudulent character witness letters.  The defendant claimed the letters, which contained suspicious similarities, were sent to the court in support of a more lenient sentence.  Some of the individuals who purportedly sent the letters signed declarations stating that they did not write the letters nor did they authorize the letters to be sent to the court on their behalf.

In addition to prison time, Judge Cooper also sentenced George to three years of supervised release, ordered him to $2.55 million in restitution and entered a forfeiture money judgment of $2.55 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; postal inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates; and criminal investigators with the U.S. Attorney’s Office, with the investigation leading to today’s sentencing.

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

This case 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.

TRENTON, N.J. – C. Tate George, former NBA basketball player and the CEO of purported real estate development firm The George Group, was sentenced today to 108 months in prison for his role in orchestrating a $2 million investment fraud scheme, U.S. Attorney Paul J. Fishman announced.

After a three-week trial before U.S. District Judge Mary L. Cooper September 2013, a jury deliberated for four hours before convicting George, 47, of Newark, New Jersey, of all of four counts of the indictment. Judge Cooper imposed the sentence today in Trenton federal court.

“Those who perpetrate Ponzi schemes shamelessly trade on relationships with those who trust them,” U.S. Attorney Fishman said. “In this case, George relied on his sports stardom to attract unwitting investors. His crimes justified today’s lengthy sentence.”           

“By shamelessly cashing in on his celebrity C. Tate George stole $2 million from investors who trusted him as a former NBA athlete,” FBI-Newark Special Agent in Charge Richard M. Frankel said. “George used the money to pay other investors in the Ponzi-style scheme and lined his pockets with the rest, funding extensive renovations on his home, paying for his daughter’s sixteenth birthday party and producing a reality video about himself.”

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

George, a former player for the New Jersey Nets and Milwaukee Bucks professional basketball teams, held himself out as the CEO of The George Group and claimed to have more than $500 million in assets under management. He pitched prospective investors, including several former professional athletes, to invest with the firm and told them their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Connecticut and New Jersey. George represented to some prospective investors that their funds would be held in an attorney trust account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and 2011, which he deposited in both the firm’s and his personal bank account. Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi-scheme fashion, as well as paying for his daughter’s sixteenth birthday party, extensive renovations on his New Jersey home (that has since been foreclosed), the mortgage on a New Jersey home, the mortgage on a Florida home, taxes to the IRS, and traffic tickets. The defendant gave money to family members and friends. He also spent $2,905 for a reality video about himself – a “sizzle reel” for “The Tate Show” – which was made available on YouTube. The George Group had virtually no income-generating operations.

During the sentencing proceeding, prosecutors asserted George had presented the court with fraudulent character witness letters. The defendant claimed the letters, which contained suspicious similarities, were sent to the court in support of a more lenient sentence. Some of the individuals who purportedly sent the letters signed declarations stating that they did not write the letters nor did they authorize the letters to be sent to the court on their behalf.

In addition to prison time, Judge Cooper also sentenced George to three years of supervised release, ordered him to $2.55 million in restitution and entered a forfeiture money judgment of $2.55 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; postal inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates; and criminal investigators with the U.S. Attorney’s Office, with the investigation leading to today’s sentencing.

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

This case 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: Pro se; John A. Azzarello Esq., Morristown, standby counsel

NEWARK, N.J. – The administrator of two criminal online hacking forums today admitted stealing log-in and payment card data as part of an international hacking conspiracy, U.S. Attorney Paul J. Fishman announced.

Sergey Vovnenko, a/k/a “Sergey Vovnencko,” “Tomas Rimkis,” “Flycracker,” “Flyck,” “Fly,” “Centurion,” “MUXACC1,”  “Stranier,” and “Darklife,” 29, most recently of Naples, Italy, pleaded guilty before the U.S. District Judge Esther Salas in Newark federal court to Count One and Count Three of an indictment charging him with wire fraud conspiracy and aggravated identity theft.

Vovnenko was arrested on June 13, 2014, following an international investigation led by the U.S. Secret Service in coordination with Italian law enforcement. He had been detained by the Italian authorities pending the resolution of extradition proceedings, which he contested for more than 15 months.

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

From September 2010 through August 2012, Vovnenko and his conspirators operated an international criminal organization that hacked into the computers of individual users and companies located in the United States and elsewhere. They used that access to steal user names and passwords for bank accounts and other online services, as well as debit and credit card numbers and related personal identifying information.

Vovnenko admitted that, in order to steal this data, he operated a “botnet” – more than 13,000 computers infected with malicious computer software – programmed to gain unauthorized access to computers and to identify, store, and export information from hacked computers. A number of the infected computers were located in New Jersey. Vovnenko admitted using malware known as “Zeus” to steal banking information and record the keystrokes of the users of infected computers.

According to the indictment, Vovnenko was a high-level administrator of several online criminal forums and used his position to traffic in the data he stole as part of the conspiracy. These forums featured electronic bulletin boards, which members used to publicly communicate with all members and also send private messages directly to individual members.

The public and private discussions on these forums typically pertained to criminal activity, including the purchase, sale, and use of stolen log-in credentials and payment card data, as well as discussions related to cybercrime activity such as malicious computer hacking. For example, in August 2012, one of the forums offered various illicit products for sale, including access to compromised computer servers located in the United States. A price was listed for each product, and customers could click an “order” button and purchase the product using “credits” associated with their accounts.

The wire fraud conspiracy charge to which Vovnenko pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The aggravated identity theft charge carries a mandatory two-year sentence, to be served consecutively to the conspiracy charge. Sentencing is scheduled for May 2, 2016.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations Division, under the direction of Director Joseph P. Clancy, and special agents from the Newark Field Office, under the direction of Acting Special Agent in Charge Kenneth Pleasant, with the ongoing investigation leading to today’s plea.

He also thanked the Department of Justice’s Office of International Affairs in Washington and its attaché in Rome; the Office of the U.S. Ambassador to the Italian Republic and the Republic of San Marino, John R. Phillips; and the Italian Ministry of Justice and Italian law enforcement officials for their extraordinary support.

The government is represented by Assistant U.S. Attorney Daniel Shapiro of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit.

Defense Cousel: Timothy Anderson Esq., Red Bank, New Jersey

NEWARK, N.J. – Igor Dubovoy, 28, Alpharetta, Georgia, today admitted his role in an international scheme to hack into three business newswires and steal yet-to-be published press releases containing non-public financial information that was then used to make trades that allegedly generated approximately $30 million in illegal profits, New Jersey U.S. Attorney Paul J. Fishman announced.           

Igor Dubovoy pleaded guilty before U.S. District Judge Madeline Cox Arleo to Count One of an indictment charging him with conspiracy to commit wire fraud. He was arrested on Aug. 11, 2015, in connection with a federal indictment brought by the District of New Jersey (DNJ) charging five individuals – two computer hackers and three securities traders – in a large-scale, international conspiracy to hack and steal press releases containing confidential nonpublic financial information relating to hundreds of companies traded on the NASDAQ and NYSE from three newswires.

In addition to Igor Dubovoy, the 23-count DNJ indictment charges Ivan Turchynov, 27, Oleksandr Ieremenko, 24, and Pavel Dubovoy, 32, all of Ukraine, and Arkadiy Dubovoy, of Alpharetta, Georgia. The defendants are all charged with wire fraud conspiracy, securities fraud conspiracy, wire fraud, securities fraud, and money laundering conspiracy.  Additionally, Ivan Turchynov and Oleksandr Ieremenko are charged with computer fraud conspiracy, computer fraud, and aggravated identity theft.

The Eastern District of New York (EDNY), in a related indictment charged four securities traders: Vitaly Korchevsky, 50, of Glen Mills, Pennsylvania, Vladislav Khalupsky, 45, of Brooklyn, New York and Odessa, Ukraine, Leonid Momotok, 47, of Suwanee, Georgia, and Alexander Garkusha, 47, of Cummings and Alpharetta, Georgia. The EDNY defendants are charged with wire fraud conspiracy, securities fraud conspiracy, securities fraud, and money laundering conspiracy.  On Dec. 21, 2015, Alexander Garkusha pleaded guilty to Count One of the EDNY indictment, charging him with conspiracy to commit wire fraud.

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

Between February 2010 and August 2015, Turchynov and Ieremenko, computer hackers based in Ukraine, gained unauthorized access into the computer networks of Marketwired L.P. (Marketwired), PR Newswire Association LLC (PRN), and Business Wire.  They used a series of targeted cyber-attacks, including “phishing” attacks and SQL injection attacks, to gain access to the computer networks. The hackers moved through the computer networks and stole press releases about upcoming announcements by public companies concerning earnings, gross margins, revenues, and other confidential and material financial information.

At one point, one of the hackers sent an online chat message in Russian to another individual stating, “I’m hacking prnewswire.com.”  In another online chat, Ieremenko told Turchynov that he had compromised the log-in credentials of 15 Business Wire employees.

The hackers shared the stolen releases with the traders using overseas computer servers that they controlled. In a series of emails, the hackers even shared “instructions” on how to access and use the overseas server where they shared the stolen releases with the traders, and the access credentials and instructions were distributed amongst the traders.  In an email, which was sent by one of the traders, the instructions for accessing the overseas server suggested that users conceal their Internet Protocol address when accessing the server as a precaution to avoid detection.  For traders created “shopping lists” or “wish lists” for the hackers listing desired upcoming press releases for publicly traded companies from Marketwired and PRN for publicly traded companies.  Trading data obtained over the course of the investigation showed that, after the shopping list was sent, the traders and others traded ahead of several of the press releases listed on it. 

The traders generally traded ahead of the public distribution of the stolen releases, and their trading activities shadowed the hackers’ capabilities to exfiltrate stolen press releases. In order to execute their trades before the releases were made public, the traders sometimes had to execute trades in extremely short windows of time between when the hackers illegally accessed and shared the releases and when the press releases were disseminated to the public by the newswires, usually shortly after the close of the markets.  Frequently, all of this activity occurred on the same day.  Thus, the trading data often showed a flurry of trading activity around a stolen press release just prior to its public release.

The traders traded on stolen press releases containing material nonpublic information about the following publicly traded companies that included, among hundreds of others: Align Technology, Inc.; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign, Inc.

The traders paid the hackers for access to the overseas servers based, in part, on a percentage of the money the traders made from their illegal trading activities. The hackers and traders used foreign shell companies to share in the illegal trading profits. 

At today’s plea hearing, Igor Dubovoy admitted that when he and others purchased stolen press releases from the computer hackers operating in Ukraine, he knew they contained earnings announcements for publicly trading companies that had not yet been made public. Igor Dubovoy also admitted that he sent the releases to Korchevsky so that he could review them and determine which trades would be profitable based on the stolen material information.

Based on Korchevsky’s recommendations, Igor Dubovoy then executed trades using a number of different brokerage accounts in his name and in Arkadiy Dubovoy’s name, as well as any entities they owned. He also admitted that he provided the hackers with access to at least one trading account held by Arkadiy Dubovoy so that they could confirm how much money was being made from the stolen information. According to Igor Dubovoy, the hackers were paid 50 percent of any profits made in the stock market based on the stolen press releases they provided.

The maximum potential penalties for Count One, conspiracy to commit wire fraud, is 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations Division, under the direction of Director Joseph P. Clancy, and special agents from the Newark Field Office, under the direction of Acting Special Agent in Charge Kenneth Pleasant, with the ongoing investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorneys Andrew S. Pak, Daniel Shapiro, David M. Eskew, and Nicholas Grippo of the Economic Crimes Unit, Computer Hacking & Intellectual Property Section, Assistant U.S. Attorney Svetlana M. Eisenberg of the General Crimes Unit, and Assistant U.S. Attorney Sarah Devlin of the Asset Forfeiture and Money Laundering Unit.

Defense counsel: Lawrence S. Lustberg, Esq., Mary Frances Palisano, Esq., Gibbons PC

CAMDEN, N.J. – A Woolwich Township, New Jersey, was sentenced today to 72 months in prison for scamming distressed homeowners into giving him their houses and then soliciting fake real estate investments from private investors – secured by those same properties – that netted him more than $3 million in illicit profits, U.S. Attorney Paul J. Fishman announced.

Randy Poulson, 44, previously pleaded guilty before U.S. District Judge Renée Marie Bumb to Count One of an indictment charging him with mail fraud. Judge Bumb imposed the sentence today in Camden federal court.

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

Poulson owned and operated Equity Capital Investments, LLC and Poulson Russo LLC and was the former president of the South Jersey Real Estate Investors Association. Paulson gave speeches, seminars, monthly dinners and various private tutorial sessions, purporting to teach real estate investing tips to individuals who paid fees to attend.

Poulson engaged in a two-pronged scheme. First, he promised to pay the mortgages of distressed homeowners facing foreclosure if they sold their homes to him. Using this method, Poulson obtained the deeds to more than 25 distressed homeowners’ residences, causing them to vacate the homes so renters could move in. Afterwards, Poulson then stopped making the monthly mortgage payments, causing those mortgages to go into foreclosure without the distressed homeowners’ knowledge.

In the second part of the scheme, Poulson solicited seminar attendees and other private investors to invest in Equity Capital Investments, which purportedly bought and sold real estate. Poulson told the investors that their money would be used to acquire and rehabilitate a property, which Poulson claimed he would rent out and then sell for a 10 to 20 percent return on the investment.

The properties for which Poulson solicited the investments were those he acquired in the first part of the scheme. Although Poulson claimed that he would use funds to acquire and rehabilitate those properties, Poulson spent the money on personal expenses and to repay other investors. As a result of the scheme, Poulson was able to fraudulently obtain more than $3 million from investors.

In addition to the prison term, Judge Bumb sentenced Poulson to three years of supervised release and ordered him to pay $2.58 million in restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special

Agent in Charge Richard M. Frankel, in Newark, for the investigation leading to today’s sentencing.

The government is represented by Attorney in Charge R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Gilbert J. Scutti Esq., Somerdale, New Jersey

Also Failed to Collect More Than $100,000 in Payroll Taxes

TRENTON, N.J. – The head of an engineering consulting firm in Wall Township, New Jersey, was sentenced today to 12 months and a day in prison for a scheme in which several of his employees fraudulently collected unemployment benefits while he paid the remaining portion of their salaries, U.S. Attorney Paul J. Fishman announced.

Lino DeAlmeida Jr., 67, of Point Pleasant, New Jersey, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of conspiracy to defraud the N.J. State Division of Unemployment Insurance (NJUI) and one count of failing to collect Social Security, Medicare, and income payroll taxes. Judge Wolfson imposed the sentence today in Trenton federal court.

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

DeAlmeida operated an engineering consulting firm, Consolidated Construction Management Services (CCMS) in Wall Township. In late 2011, DeAlmeida told his four employees that due to financial difficulties, he could not continue paying their salaries. He proposed a scheme in which the employees would claim to have been terminated from CCMS and seek unemployment benefits from the NJUI. In return, he promised to continue to pay them “under the table” for the remaining portion of their salaries that would not be covered by the benefits. Three of the CCMS employees agreed to the scheme and submitted false applications with the NJUI. 

DeAlmeida’s employee/conspirators received a total of $130,363 in benefits between July 2011 and January 2013 while receiving CCMS checks from DeAlmeida. In addition, DeAlmeida failed to pay payroll taxes of $109,068 on the undisclosed wages of $790,860 he and his conspirators received during the scheme.

In addition to the prison term, Judge Wolfson sentenced DeAlmeida to two years of supervised release, fined him $10,000, ordered him to pay restitution of $138,532 to NJUI and pay his unpaid federal corporate and personal taxes.

U.S. Attorney Fishman credited special agents of 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; and 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 V. Grady O’Malley, Senior Litigation Counsel of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.

Defense counsel: Jeffrey D. Smith Esq., Teaneck, New Jersey

CAMDEN, N.J. – A Pleasantville, New Jersey, man today admitted participating in a nearly three-year conspiracy to distribute cocaine and crack cocaine in the Atlantic City, New Jersey area, U.S. Attorney Paul J. Fishman announced.

Ronald Douglas Byrd, 51, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to Count One of an indictment charging him with conspiring with others to distribute more than 280 grams of crack cocaine.

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

From February 2012 through Dec. 10, 2014, Byrd admitted that he and others engaged in a drug trafficking conspiracy through which Byrd distributed more than one kilogram of crack cocaine. Members of the conspiracy used Byrd’s Pleasantville residence and at least two other residences in Pleasantville and Absecon to store and package cocaine and crack cocaine.

The distribution conspiracy charge to which Byrd pleaded guilty is punishable by a minimum penalty of 10 years in prison, a maximum potential penalty of life in prison and a $10 million fine. Sentencing is scheduled for June 10, 2016.

Byrd is the sixth person to plead guilty to participating in this drug trafficking conspiracy. Kareem Taylor, 41, of Atlantic City; Talib Tiller, 43, of Mays Landing, New Jersey; John Wellman, 41, of Somers Point, New Jersey; and Phillip Horton, 50, of Los Angeles, California, have all pleaded guilty and await sentencing. Francisco Alberto Rascon-Muracami, 22, of Obregon, Mexico, was sentenced Oct. 30, 2015 to 70 months in prison. Trial for the remaining defendants is scheduled for May 23, 2016.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel; the Drug Enforcement Administration’s Newark 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 plea.

He also thanked the N.J. State Police; 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 Vondra Carrig of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Michael Huff Esq., Philadelphia

NEWARK, N.J. - A Springfield, New Jersey, man today admitted his role in a scheme that used bogus records and unqualified home health aides to defraud Medicare out of $7 million, U.S. Attorney Paul J. Fishman announced. 

Paul Mil, 66, pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with conspiracy to commit health care fraud, money laundering and tax evasion.

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

Mil was the owner of People Choice Home Care Inc., a home health care agency located in Elizabeth, New Jersey, that provided home health aides and health care services to New Jersey residents. Mil was also the registered agent for HHCH Health Care Inc. in Linden, New Jersey, a home health care agency owned by Irina Krutoyarsky, 61, of Springfield, New Jersey. Home health aides visit patients at their homes and provide a variety of services, such as assistance with eating, dressing and grooming. These services were subsidized under the New Jersey Medical Assistance Program (Medicaid).

Mil, Krutoyarsky and others defrauded Medicaid through a variety of ways. First, they submitted false documents to the New Jersey 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.   

Second, Mil, Krutoyarsky and others 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. In truth, 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. In certain instances, home health aides gave cash kickbacks to patients who were also participating in the scheme. 

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

In total, Mil and others defrauded Medicaid out of $7 million. After Medicaid paid the claims and transferred the funds into bank accounts controlled by Mil, he used the proceeds to purchase real estate and personal property.

Additionally, between 2007 and 2011, Mil cheated the IRS out of approximately $918,000 in taxes due and owing. As part of the scheme, home health aides were sent to the homes of patients who were not eligible for Medicaid. These patients wrote checks payable to HHCH and People Choice. Mil then cashed these checks at check cashing businesses and equally divided the cash with Krutoyarsky. On his corporate tax returns, he falsely characterized these payments as legitimate business deductions, thus reducing his business’ corporate taxes.  He then filed federal individual income tax returns that concealed this income.

Nine other individuals, including Krutoyarsky, have already pleaded guilty to their respective roles in the scheme. 

The conspiracy and money laundering counts to which Mil pleaded guilty each carry a maximum potential penalty of 10 years in prison. The tax evasion count carries a maximum potential penalty of five years in prison. Each charge carries a potential $250,000 fine.  Sentencing is scheduled for May 3, 2016. In addition, Mil will be ordered to pay a $7 million forfeiture money judgment to the United States and to forfeit six homes and properties in New Jersey and New York, as well as hundreds of thousands of dollars seized from bank accounts he controlled.

U.S. Attorney Fishman credited agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; U.S. Citizenship and Immigration Services; New Jersey Office of the State Comptroller, Medicaid Fraud Division under the direction of Director Josh Lichtblau; The Enforcement Bureau of the New Jersey Attorney General’s Office on behalf of the Board of Nursing, Acting Attorney General John Jay Hoffman; the New Jersey Department of Labor under the direction of Commissioner Hal Wirths; the Marlboro Police Department, under the direction of Chief Bruce Hall; and the U.S. Department of State-Diplomatic Security for the investigation leading to today’s plea.

The government is represented by Senior Litigation Counsel V. Grady O’Malley and Assistant U.S. Attorneys Peter Gaeta and Anthony Moscato of the New Jersey U.S. Attorney’s Office Criminal Division in Newark.

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

CAMDEN, N.J. – A Manchester, New Jersey, man today admitted paying tens of thousands of dollars in bribes to a sports medicine doctor on behalf of Prescriptions R Us, a compound pharmacy in Lakewood, New Jersey, U.S. Attorney Paul J. Fishman announced. 

Howard Wertheim, 67, pleaded guilty before U.S. District Judge Joseph H. Rodriguez in Camden federal court to an information charging him with one count of paying kickbacks.

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

Wertheim admitting that from February 2013 through October 2013, he worked for Vladimir Kleyman, 44, of Lakewood, New Jersey, the president and pharmacist-in-charge of Prescriptions R Us. As a compounding pharmacy, Prescriptions R Us prepared medication using different types and dosages of drugs in order to provide more personalized medications for patients. Prescriptions R Us supplied a topical cream for pain treatment that was made from ketamine (a Schedule III non-narcotic), lidocaine, diclofenac and other ingredients.

Wertheim admitted that Kleyman paid him to help recruit and pay physicians to refer their prescriptions to Prescriptions R Us. Wertheim admitted that as part of the scheme, he paid tens of thousands of dollars in cash bribes to James Morales, 45, a sports medicine doctor with a practice in Toms River, New Jersey, in exchange for referring pain cream prescriptions.

The kickback charge to which Wertheim pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for April 25, 2016. As part of his plea agreement, Wertheim must forfeit $25,000, representing the money he made as payment for his work as a middle-man in the scheme.

Morales, who admitted accepting more than $60,000 in cash bribes as part of the scheme, pleaded guilty to an information charging him with conspiracy to accept kickbacks and health care fraud on June 29, 2015 and awaits sentencing. Kleyman, who previously pleaded guilty to an information charging him with conspiracy to pay kickbacks and to commit health care fraud on Oct. 14, 2014, was sentenced Nov. 4, 2015 to 20 months in prison.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Jane H. Yoon and R. David Walk Jr. of the U.S. Attorney’s Office 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 $640 million 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: William Cunningham, Brick, New Jersey                                                                                                                                      

NEWARK, N.J. – An Essex County, New Jersey, man charged with robbing Capital One Bank in Newark twice, including once in an armed robbery, will make his initial court appearance today, U.S. Attorney Paul J. Fishman announced.

Gregory A. Jones, 59, of Newark, is charged by complaint with two counts of bank robbery and one count of using a firearm during the commission of a crime of violence. Jones is expected to make his initial appearance this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court. 

According to the complaint and statements made in court:

On May 6, 2014, Jones entered the Capital One Bank wearing dark glasses and a scarf and presented the teller a note demanding cash. After Jones left the bank with stolen money, including a dye pack, law enforcement recovered a pair of dark glasses and a scarf near the bank next to currency, saturated with ink from the dye pack. DNA recovered from the glasses and the scarf matched a DNA sample that previously was lawfully obtained from Jones. He was later identified based on surveillance video and witness statements.

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

Jones has been detained in the Essex County Jail on state charges related to the May 6, 2014 robbery.

The bank robbery counts each carry a maximum potential penalty of up to 20 years in prison and a fine of up to $250,000 or twice the gross pecuniary gain or loss. The discharging a firearm during the bank robbery count carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison, which must be served consecutive to the other counts.

U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, New Jersey; N.J. State Police, under the direction of Col. Rick Fuentes; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; and the Newark Police Department, under the direction of Public Safety Director Anthony Ambrose, with the investigation leading to the charges.

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

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

CAMDEN, N.J. – An Atlantic City, New Jersey, man was sentenced today to 30 months in prison for assisting members and associates of an organized crime family in a fraud scheme, U.S. Attorney Paul J. Fishman announced.

John Parisi, 54, previously pleaded guilty before U.S. District Judge Robert B. Kugler to conspiring to defraud FirstPlus Financial Group Inc. (FPFG), a Texas-based financial services company targeted for extortionate takeover and looting by a group led by Nicodemo S. Scarfo. Judge Kugler imposed the sentence today in Camden federal court.

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

Parisi and 12 others – including his cousin, Scarfo, an alleged member of the Lucchese La Cosa Nostra (LCN) crime family, and Salvatore Pelullo, an alleged associate of the Lucchese and Philadelphia LCN families – were variously charged in a November 2011 indictment with a racketeering conspiracy, including acts of securities fraud, wire fraud, mail fraud, bank fraud, extortion, interstate travel in aid of racketeering, money laundering and obstruction of justice. The indictment charged that FPFG was targeted for extortionate takeover and looting by a group of the conspirators. A substantial part of the enterprise’s activities occurred in New Jersey, including communications and the transfer of money into and out of the state. John Parisi admitted that he joined the conspiracy in April 2007.

Parisi managed a family trust and a limited liability company on behalf of Scarfo as part of the scheme to defraud FPFG.  Parisi said Scarfo directed him in the use of various bank accounts through which Scarfo received hundreds of thousands of dollars between July 2007 and April 2008 as part of the scheme. As alleged in the indictment, the money involved proceeds of the fraud that Scarfo allegedly received as part of a fraudulent “consulting” agreement between his shell company, Learned Associates, and one controlled by Pelullo. The money also involved proceeds received from the fraudulent sale of Scarfo and Pelullo’s worthless companies to FPFG in 2007. The receipt of the fraudulent proceeds often occurred in the form of wire transfers from accounts in Pennsylvania to accounts in New Jersey.

Parisi admitted that beginning in February 2008 he assisted Scarfo and his then-fiancée, Lisa Marie Scarfo, obtain a mortgage for a $715,000 house in Egg Harbor Township, New Jersey, that the Scarfos intended to purchase. Lisa Marie Scarfo pleaded guilty on Sept. 17, 2013, to a conspiracy to make a false mortgage loan application in connection with the purchase of the Egg Harbor Township house.

In addition to the prison term, Judge Kugler sentenced Parisi to two years of supervised release and ordered him to pay $14 million in restitution.

Scarfo, Pelullo, and William and John Maxwell were convicted in convicted in July 2014 of racketeering conspiracy and related offenses, including securities fraud, wire fraud, mail fraud, bank fraud, extortion, money laundering and obstruction of justice, after a six-month trial before Judge Kugler.  Scarfo and Pelullo were previously sentenced to 30 years in prison.  William and John Maxwell were previously sentenced to 20 and 10 years in prison, respectively.

U.S. Attorney Fishman credited special agents of the FBI in Newark, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s sentencing. They also thanked the U.S. Department of Labor-Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations New York Region, the FBI’s Philadelphia Division and the Bureau of Alcohol, Tobacco, Firearms and Explosives for their roles in the case.

The government is represented by Assistant U.S. Attorneys Steven D’Aguanno and Howard Wiener of the New Jersey U.S. Attorney’s Office Camden Office.

Defense counsel:  Lisa Evans Lewis Esq., Camden

TRENTON, N.J. – Two people appeared in federal court today on charges they conspired to engage in sex trafficking of a minor and engaged in sex trafficking of a minor, U.S. Attorney Paul J. Fishman announced.

Aaron Gray, 29, a/k/a “AR,” Aja Easley, 22, both of Camden, appear this afternoon before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court. Gray, Easley and a third defendant, Kenneth Mertz, 35, of Collingswood, who remains at large, are each charged in a three-count complaint with conspiracy to engage in sex trafficking of a minor and with sex trafficking of a minor. Gray is also charged with being a felon in possession of a firearm. Gray and Easley were ordered detained without bail.

According to the documents filed in this case:

On March 2, 2015, Easley allegedly communicated with the victim, a minor, using a social media website. She told the victim she was “worried about” the victim because of a previous assault by the victim’s boyfriend. She offered the victim money, clothing and shelter and met with the victim at the Camden Transportation Center. Easley allegedly told the victim about a dating website and said the victim could make money through the website by going on “dates.” Easley and the victim later met Gray and Mertz at a residence in Camden. Mertz then drove everyone to a motel in Cherry Hill.

At the motel, Gray and Easley allegedly attempted to convince the victim to engage in commercial sex acts and took suggestive photos of the victim, which were used as part of an advertisement on the website. Easley used her cellular telephone to communicate with multiple individuals who responded to the ad. Gray gave the victim instructions on what to do when the respondents arrived. The victim observed Gray in possession of a firearm and also observed a collapsible nightstick, which was later determined to belong to Mertz.

On March 3, 2015, at a motel in Mount Laurel, New Jersey, the victim engaged in sex acts with multiple individuals, who responded to the ad and paid money to the defendants. The defendants later told the victim they were taking the victim to Atlantic City, New Jersey, to meet another person who had responded to the ad.

On the way to Atlantic City, the defendants allegedly agreed to let the victim stop at a residence in Gloucester City, New Jersey. The victim went inside and contacted the police, leading to the defendants’ arrest.

The count of conspiracy to engage in the sex trafficking of a minor carries a maximum penalty of life in prison. The substantive count of sex trafficking of a minor carries a statutory mandatory minimum of 10 years in prison and a statutory maximum of life in prison.  The felon-in-possession count carries a maximum statutory penalty of 10 years in prison. Each count also carries a maximum fine of $250,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, and members of the Mount Laurel Police Department, under the direction of Police Chief Dennis Cribben, and the Gloucester City Police Department, under the direction of Acting Police Chief Michael Morell, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney J. Brendan Day in Trenton.

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