Eastern District of New York

יעקב דאסקאל האט זיך איינגעגעבן אלס שולדיג אום יולי 14, 2023 פאר׳ן טראנספארטירן א קינד מיט׳ן כוונה צו באגיין סעקסועלע פארברעכנס.  די היינטיגע פראצעדור איז פארגעקומען ביים יונייטעד סטעיטס דיסטריקט ריכטער ניקאלאס דזשי. גאראופיס.  אלס טייל פון זיין שולד איינגעבונג, האט דער באשולדיגטער מסכים געווען אויף אן אורטייל פון בערך 14 ביז 17 א האלב יאר אין טורמע. אלס טייל פון דעם שולד איינגעבונג, מוז דאסקאל זיך רעגיסטרירן אלס א סעקס פארברעכער.

ברעאן פיעס, יונייטעד סטעיטס אטוירני פאר׳ן איסטערן דיסטריקט פון ניו יארק האט אויסגעמאלדן דעם שולד איינגעבונג. 

״דער באשולדיגטער האט מודה געווען אז ער האט אויסגעניצט אויף בייזן זיין מאכט, צוטרוישאפט און פאזיציע אינערערהאלב דער קאמיוניטי דורך באגיין שענדליכע מעשים קעגן א קינד אין זיין אויפפאסונג,״ האט געזאגט יונייטעד סטעיטס אטוירני פיעס.  ״מיר ווילן אז געליטענע קרבנות איבעראל זאלן הערן דעם שולד הודאה אלס אונזער אפיס׳ס אנגייענדע דעקלעראציע אז קיינער שטייט נישט העכער פונעם געזעץ און מיר וועלן ברענגען צו יוסטיץ די וועלכע בא׳עוולה׳ן אונזערע קינדער.״ 

מר. פיעס האט אויסגעדרוקט זיין דאנקבארשאפט פאר׳ן פעדעראלער ביורא פון פארשונג (׳פעדעראל ביורא אוו אינוועסטיגעשען׳), ניו יארק פיעלד אפיס, דעם קינגס קאונטי דיסטריקט אטוירני׳ס אפיס און דעם ניו יארק סיטי פאליציי דעפארטמענט.

ווי פארגעלייגט אין געריכט דאקומענטן, איז דער באשולדיגטער געווען הויפט פון בארא פארק חברה שומרים (די ״שומרים״), א פריוואטע, ארטאדאקסיש-אידישער שמירה גרופע פארבינדן מיט׳ן ניו יארק פאליציי דעפארטמענט.  אין פרילינג 2017, האט דער פארדעכטיגטער, אויסניצנדיג זיין פאזיציע אין שומרים, זיך פארבינדן מיט א 15-יעריגע מיידל, וועם ער האט אריינגעברענגט ביי זיך אינדערהיים און איר איבערגערעדט און גרייט געמאכט פאר סעקס.  צווישן אוגוסט און נאוועמבער 2017, איז דער באשולדיגטער, וועלכער איז דאן געווען 58 יאר אלט, באגאנגען סעקסועלע מעשים אויף דעם 15-יעריגן קרבן. 

דורכאויס דעם זומער 2017, איז פארגעקומען די סעקסועלע געפירעכץ הויפטזעכליך ביי דאסקאל אינדערהיים אין ברוקלין, ניו יארק, און ביי זיין זומער הויז אין סאוט פאלסבורג, ניו יארק.  דער באשולדיגטער האט אפט טראנספארטירט דעם קרבן צווישן די צוויי ערטער דורכפארנדיג ניו דזשערזי.   אין ענדע אוגוסט, האט זיך דער באשולדיגטער, אינאיינעם מיט זיין פאמיליע, און די געליטענע קרבן, זיך אומגעקערט פול-צייטיג צו זיין הויז אין ברוקלין, וואו דאס בא׳עוולה׳ען איז ווייטער אנגעגאנגען.  אזוי ווי דער סקול יאר האט זיך אנגעהויבן, האט דער באשולדיגטער געהאלפן דעם קרבן טרעפן א נייע סקול אין שיקאגא, אילינאי, און אין אקטאבער 2017 האט זי זיך אהינגעצויגן אויף צו גיין אין סקול און צו וואוינען מיט אן אנדערער פאמיליע.  בשעת די געליטענע איז געווען אין שיקאגא, האט דער באשולדיגטער קאמוניקירט מיט איר דורך טעקסט מעסעדזשעס און איבער סקייפ ווידעאו טשעט.  אום אדער בערך נאוועמבער 5, 2017, איז דער באשולדיגטער געפארן קיין שיקאגא פאר א טאג אויף צו באזוכן די בא׳עוול׳טע.  דער באשולדיגטער האט געדינגען א האטעל צימער אין שיקאגא, און געברענגט דעם קרבן צום האטעל פאר סעקסועלע מעשים און אָורעל סעקס.  ער איז צוריקגעפלויגן יענעם אוונט קיין ניו יארק.

דורכאויס דאס בא׳עוולה׳ען, האט דער באשולדיגטער אנגעזאגט דעם קרבן אויסצומעקן זייערע קאמוניקאציעס און איר געווארנט קיינעם נישט צו דערציילן איבער זייער סעקסועלע באציאונגען.  דער באשולדיגטער האט אויך אויסגעניצט זיין פאזיציע אלס א פירנדער מיטגליד פון זייער קאמיוניטי אויף שטיל צו מאכן דעם קרבן, זיך גרויס געהאלטן איבער זיינע פארבינדונגען מיט געזעץ אינפארסירער און איר געווארנט אז עס וועט איר חרוב מאכן דאס לעבן אויב פארציילט זי עמיצן איבער זייערע באציאונגען. 

די רעגירונג׳ס קעיס ווערט געפירט דורך דעם אפיס׳ס ציווילע רעכטן אפטיילונג.  אסיסטענט יונייטעד סטעיטס אטוירני

ערין ריעד און דזשעני נגאי זענען באאויפטראגט מיט׳ן פראקורירן, מיט הילף פון ליטיגאציע אנאליסט רייען קאסטלי. 

A Russian citizen with alleged ties to Russia’s Federal Security Service (FSB) will be arraigned today on an indictment charging him with conspiracy and other charges related to a global procurement and money laundering network on behalf of the Russian government.

According to court documents, Vadim Konoshchenok, 48, of Tallinn, Estonia, was arrested in Estonia on a provisional arrest warrant issued from the Eastern District of New York and extradited from Estonia to the United States on July 13.

“This defendant, who is suspected of having ties to the FSB, smuggled hundreds of thousands of illicit munitions in support of Moscow’s war machine, using front companies to conceal his criminal enterprise,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Department of Justice remains steadfast in its mission to counter Russian aggression and we will give no quarter to those who violate U.S. sanctions to further fuel its war effort.”

“In early December, I met with Estonian counterparts in Tallinn regarding the pending U.S. request to arrest Vadim Konoshchenok,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “I would like to pay tribute to Prosecutor General Andres Parmas’s team, and to the Estonian Internal Security Service, for their prioritization of this case, and for their close coordination with the Department of Justice’s Office of International Affairs on the provisional arrest and extradition of Konoshchenok.”

“As alleged, the defendant was a critical participant in a scheme to provide sensitive, American-made electronics and ammunition in furtherance of Russia’s war efforts and weapons development, violating U.S. export controls, economic sanctions and other criminal statutes,” said U.S. Attorney Breon Peace for the Eastern District of New York. “Let this case serve as the latest example that no matter where you are in the world, if you violate U.S. export controls or evade U.S. sanctions, we will not rest until you face justice in a U.S. courtroom.”

“The FBI and our partners work diligently to bring to justice those who assist Russia’s military interests and put national security at risk,” said Assistant Director Suzanne Turner of the FBI’s Counterintelligence Division. “According to the allegations in the indictment, Konoshchenok helped the FSB smuggle military grade ammunition and a range of nuclear and computer equipment which could be used as instruments of war. Today’s indictment is a fierce reminder of the lengths Russian intelligences services will go to advance Russia’s military capabilities. The FBI is deeply committed to disrupting and dismantling these actions.”

According to the indictment and court filings, Konoshchenok and his co-defendants were affiliated with Serniya Engineering and Sertal LLC (the Serniya Network), Moscow-based companies that operate under the direction of Russian intelligence services to procure advanced electronics and sophisticated testing equipment for Russia’s military industrial complex and research and development sector, some of which can be used in the development of nuclear and hypersonic weapons, quantum computing and other military applications. Following Russia’s invasion of Ukraine in February 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce (DOC) Bureau of Industry and Security (BIS) levied sanctions against Serniya, Sertal and several individuals and companies engaged in the scheme, calling them “instrumental to the Russian Federation’s war machine.”

As alleged in the indictment, the Serniya Network was licensed to conduct highly sensitive and classified procurement activities by Russia’s FSB, Russia’s principal security agency and the main successor agency to the Soviet Union’s KGB. According to court documents, in electronic communications, Konoshchenok explicitly identified himself as an FSB “Colonel” and enclosed a photograph of himself wearing his FSB uniform. Additionally, a review of electronic communications equipment recovered from Konoshchenok revealed saved contacts beginning with the prefix “FSB” and email addresses from “FSB[.]ru” domains. One of Konoshchenok’s calendar entries referenced an “FSB order.”

As described in the indictment, Estonia was a popular transshipment point, where Konoshchenok would smuggle U.S.-origin items across the border into Russia. On Oct. 27, 2022, Konoshchenok was detained by Estonian authorities while attempting to cross into Russia from Estonia with approximately 35 different types of semiconductors and electronic components, including several U.S.-origin and export-controlled items. Konoshchenok has also been repeatedly stopped by Estonian border officials attempting to smuggle hundreds of thousands of American-made and export-controlled rounds into Russia, including 6.5 mm, 7 mm, .338 and .308 magnum rounds, which are commonly used by snipers, as well as military-grade .223 rounds.

Konoshchenok used an Estonian front company called Stonebridge Resources and communicated frequently with other co-conspirators about sourcing, transporting and paying for controlled items. In electronic communications, Konoshchenok is clear that his fee is “10%” because he “can’t do less. Sanctions . . . Sanction item for 10%.”

To date, over half a ton of military-grade ammunition linked to Konoshchenok has been recovered or interdicted before being smuggled into Russia.

If convicted, Konoshchenok faces a maximum penalty of 30 years in prison.

The FBI is investigating the case. The Justice Department’s Office of International Affairs and the Estonian authorities, including Estonian Internal Security Service (KAPO) and the Prosecutor General’s Office of the Republic of Estonia, provided significant assistance in securing foreign evidence, the arrest and extradition of Konoshchenok.

Assistant U.S. Attorneys Artie McConnell and Matthew Skurnik for the Eastern District of New York and Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

This case has been coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will leverage all the Department’s tools and authorities against efforts to evade or undermine the economic actions taken by the U.S. government in response to Russian military aggression.

Vadim Konoshchenok will be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn on an indictment charging him with conspiracy and other charges related to a global procurement and money laundering network on behalf of the Russian government.  Konoshchenok, a Russian citizen with alleged ties to Russia’s Federal Security Service (FSB), was arrested in Estonia on a provisional arrest warrant issued from the Eastern District of New York and extradited from Estonia to the United States on July 13, 2023.

Breon Peace, United States Attorney for the Eastern District of New York; Kenneth A. Polite, Jr., Assistant Attorney General for the Justice Department’s Criminal Division; Andrew C. Adams, Director, Task Force KleptoCapture; Christie M. Curtis, Acting Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan Carson, Special Agent-in-Charge, U.S. Department of Commerce, Office of Export Enforcement, New York Field Office (DOC), announced the extradition.

“As alleged, the defendant was a critical participant in a scheme to provide sensitive, American-made electronics and ammunition in furtherance of Russia’s war efforts and weapons development, violating U.S. export controls, economic sanctions and other criminal statutes,” stated United States Attorney Peace.  “Let this case serve as the latest example that no matter where you are in the world, if you violate U.S. export controls or evade U.S. sanctions, we will not rest until you face justice in a U.S. courtroom.”

United States Attorney Peace thanked the Department of Justice’s Office of International Affairs and Estonian authorities, including Estonian Internal Security Service (KAPO) and the Prosecutor General’s Office of the Republic of Estonia for their significant assistance in securing foreign evidence, the arrest and extradition of Konoshchenok.

“In early December, I met with Estonian counterparts in Tallinn regarding the pending U.S. request to arrest Vadim Konoshchenok,” stated Assistant Attorney General Polite.  “I would like to pay tribute to Prosecutor General Andres Parmas’s team, and to the Estonian Internal Security Service, for their prioritization of this case, and for their close coordination with the Department of Justice’s Office of International Affairs on the provisional arrest and extradition of Konoshchenok.”

“This defendant, who is suspected of having ties to the FSB, smuggled hundreds of thousands of illicit munitions in support of Moscow’s war machine, using front companies to conceal his criminal enterprise,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Department of Justice remains steadfast in its mission to counter Russian aggression and we will give no quarter to those who violate U.S. sanctions to further fuel its war effort.”

“Vadim Konoshchenok allegedly provided cutting edge, American-developed technologies and ammunition to Russia for use in their illegal and unprovoked invasion of Ukraine. Far from the battlefield, Konoshchenok will now face justice in an American courthouse, thanks to the staunch commitment of our Estonian partners and the federal prosecutors and agents who have dedicated their time and talents to disrupting the Kremlin’s war machine,” stated KleptoCapture Director Adams.

“Last year, charges were announced against the defendant and others involved in this complex transnational criminal scheme under the direction of Russian intelligence services. Today’s extradition of Vadim Konoshchenok is a testament to the team of law enforcement professionals dedicated to enforcing U.S. export controls,” stated DOC Special Agent-in-Charge Carson.  “We will continue to enforce the unprecedented export controls implemented in response to Russia’s illegal war against Ukraine and the Office of Export Enforcement intends to pursue these violators wherever they may be worldwide.”

According to the indictment and court filings, the defendants were affiliated with Serniya Engineering and Sertal LLC (the “Serniya Network”), Moscow-based companies that operate under the direction of Russian intelligence services to procure advanced electronics and sophisticated testing equipment for Russia’s military industrial complex and research and development sector, some of which can be used in the development of nuclear and hypersonic weapons, quantum computing and other military applications.  Following Russia’s invasion of Ukraine in February 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce (DOC) Bureau of Industry and Security (BIS) levied sanctions against Serniya, Sertal and several individuals and companies engaged in the scheme, calling them “instrumental to the Russian Federation’s war machine.”

As alleged in the indictment, the Serniya Network was licensed to conduct highly sensitive and classified procurement activities by Russia’s FSB, Russia’s principal security agency and the main successor agency to the Soviet Union’s KGB.  In electronic communications, Konoshchenok explicitly identified himself as an FSB “Colonel” and enclosed a photograph of himself wearing his FSB uniform.  Additionally, a review of electronic communications equipment recovered from Konoshchenok revealed saved contacts beginning with the prefix “FSB” and email addresses from “FSB[.]ru” domains.  One of Konoshchenok’s calendar entries referenced an “FSB order.”

As described in the indictment, Estonia was a popular transshipment point, where Konoshchenok would smuggle U.S.-origin items across the border into Russia.  On October 27, 2022, Konoshchenok was detained by Estonian authorities attempting to cross into Russia from Estonia with approximately 35 different types of semiconductors and electronic components, including several U.S.-origin and export-controlled items.  Konoshchenok has also been repeatedly stopped by Estonian border officials attempting to smuggle hundreds of thousands of American-made and export-controlled rounds into Russia, including 6.5 mm, 7 mm, .338 and .308 magnum rounds, which are commonly used by snipers, as well as military-grade .223 rounds.  To date, over half a ton of military-grade ammunition linked to Konoshchenok has been recovered or interdicted before being smuggled into Russia.  Konoshchenok used an Estonian front company called “Stonebridge Resources” and communicated frequently with other co-conspirators about sourcing, transporting and paying for controlled items.  In electronic communications, Konoshchenok is clear that his fee is “10%” because he “can’t do less.  Sanctions . . . Sanction item for 10%.”

If convicted, the defendant faces a maximum of 30 years’ imprisonment.  The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Artie McConnell, Craig Heeren, and Matthew Skurnik are in charge of the prosecution, along with Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section. 

The Defendant:

VADIM KONOSHCHENOK
Age:  48
Tallin, Estonia

E.D.N.Y. Docket No. 22-CR-409 (HG)

Earlier today, Rami Saab, of Glen Cove, New York, pleaded guilty at the federal courthouse in Central Islip to conspiracy to commit wire fraud in connection with his participation in a scheme to defraud banks and the Small Business Association (SBA) of millions of dollars’ worth of small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP).  Today’s proceeding was held before United States District Judge Gary R. Brown.  When sentenced, Saab faces up to 20 years in prison, as well as restitution of $9,668,508 and a fine of up to $250,000.

Breon Peace, United States Attorney for the Eastern District of New York, Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), Thomas M. Fattorusso, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), and J. Russell George, Treasury Inspector General for Tax Administration (TIGTA) announced the guilty plea.

“Using fraud and deceit, the defendant callously stole millions of dollars during an unprecedented public health crisis at the expense of American small business owners,” stated United States Attorney Peace.  “Those who engaged in blatant theft of taxpayer dollars intended to assist legitimate businesses and their employees during the COVID-19 pandemic should know they will be aggressively prosecuted by our Office.”

Mr. Peace thanked the Nassau County Police Department for their assistance on this case.

“As alleged, Rami SAAB stole nearly $10 million dollars in relief money intended for small businesses impacted by the COVID-19 global pandemic, for his own enrichment,” stated HSI Special Agent-in-Charge Arvelo.  “This is an egregious case of fraud perpetrated by an individual who pilfered a program intended for those who truly needed emergency financial assistance. HSI and our law enforcement partners remain steadfastly committed to rooting out such thievery and ensuring violators are prosecuted to the fullest extent of the law.”

“Saab pocketed nearly $10 million in ill-gotten gains by exploiting benefits meant to help those truly in need.  Criminals like Saab continue to seek the quickest way to make a buck, regardless of the rule of law or those who may be victimized in the process.  But as a result of strong law enforcement partnerships, today’s guilty plea means Saab now faces a large prison sentence for his criminal acts,” stated IRS-CI Special Agent-in-Charge Fattorusso.

“As alleged, the defendant and his co-conspirators fraudulently obtained more than $9.5 million in Federal funds from the Payroll Protection Program and Emergency Injury Disaster Loans through applications containing fraudulent documents.  Fraud schemes like these defraud not only a program intended to help small businesses weather a global pandemic but also the United States' taxpayers.  The Treasury Inspector General for Tax Administration is committed to working with our law enforcement partners and the United States Attorney’s Office to prevent these types of fraud and to bring those responsible to justice.”

As set forth in court filings, between May 2020 and May 2021, amid the height of the COVID-19 pandemic, Saab, working with others, fraudulently applied for, and received, at least 20 PPP and EIDLP loans totaling in excess of $9,500,000, on behalf of numerous corporate entities under his control.  Saab submitted applications on behalf of these entities even though these were not, in fact, real businesses.  Instead, these entities were “shell companies” that claimed false numbers of employees, payroll costs, and intended use of the loan proceeds – all of which was specifically designed to mislead the SBA and numerous banks administering the PPP and EIDLP loan programs.  Shortly after the loans were funded, Saab engaged in numerous financial transactions designed to conceal the true nature and source of the funds, including electronically transferring portions of the loan proceeds between various bank accounts which Saab controlled.  Saab, after transferring the loan proceeds though multiple accounts, utilized the laundered loan proceeds to enrich himself and others, including by personally making cash withdrawals and transferring funds to associates overseas.      

Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Enacted on March 29, 2020, the CARES Act provided emergency financial assistance in connection with economic effects of the COVID-19 pandemic.  One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities.  The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.

Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters.  Under the program, EIDLP recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL.  The amount of an EIDL advance –which did not need to be repaid – was determined based on the number of employees working for the applicant. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Anthony Bagnuola and Michael Maffei are in charge of the prosecution.

The Defendant:

RAMI SAAB (also known as “Rami Hasan”)
Age:  44
Glen Cove, New York

E.D.N.Y. Docket No. 22-CR-344 (GRB)

A New York man was sentenced today to life in prison on one count of conspiracy to provide material support to the Islamic State of Iraq and al-Sham (ISIS) and five substantive counts of providing material support to ISIS in the forms of personnel, including himself, Australian citizen Jake Bilardi and others, as well as services, weapons, property and equipment, and false documentation and identification, all between January 2013 and June 2017, when the defendant was arrested in Sarajevo, Bosnia and Herzegovina.

According to court documents, Mirsad Kandic, 41, of Brooklyn and Kosovo, was convicted by a federal jury in May 2022 following a three-week trial in Brooklyn.

“Serving ISIS’s deadly terror campaign, this defendant fought on the battlefield, spread propaganda, smuggled weapons, and radicalized Western recruits,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The National Security Division was created to counter foreign terrorist organizations like ISIS and, with our partners, we remain committed to identifying and holding accountable those who provide support to such terrorist groups.”

“Kandic was a high-ranking member of ISIS who relished the death and destruction he wrought while providing every conceivable form of material support to a terrorist organization, including the recruitment of countless others to ISIS’s bloody campaigns in Syria and elsewhere,” said U.S. Attorney Breon Peace for the Eastern District of New York. “Today’s sentence holds the defendant accountable for his conduct and ensures that he will never again pose a threat to the United States or any of our allies. This office will remain relentless in prosecuting terrorists who threaten the safety and security of the United States and U.S. interests around the world.”

“The defendant in this case provided numerous forms of material support to ISIS for years, and today, he was brought to justice for his actions,” said Assistant Director Robert R. Wells of the FBI’s Counterterrorism Division. “This sentencing demonstrates the serious commitment of the FBI and our law enforcement partners around the world to investigating and holding accountable terrorists who threaten the safety and security of American interests, and those of our allies.”

After several failed attempts to travel from the United States to Istanbul, Turkey, Kandic took a two-day Greyhound bus ride from New York City to Monterrey, Mexico, in November 2013, and flew through Panama, Brazil, Portugal, Germany, Kosovo, and Turkey before arriving in Syria at the end of 2013. Once in Syria, the defendant joined ISIS and became a fighter for the group in Haritan, an ISIS stronghold in the outskirts of Aleppo, wielding Russian-made PK machine guns and AK-47 assault rifles.

ISIS leadership then sent the defendant to Turkey to take up the role of smuggling foreign fighters and weapons into Syria from abroad, and to serve as an emir for ISIS media. Kandic disseminated ISIS recruitment messages and gruesome propaganda using more than 120 Twitter accounts. For example, the defendant sent out an ISIS-produced “documentary” titled “Flames of War.” This video celebrated ISIS conquests and macabre executions of ISIS captives, including instances where victims were forced to dig their own graves before being summarily executed by gunshot. The defendant tweeted that this video was the “best thing ever seen on screen.”

Kandic was a prolific recruiter of foreign fighters for ISIS. He sent thousands of radicalized ISIS volunteer fighters from Western countries into ISIS-controlled territories in Syria and elsewhere in the Middle East. This included a fellow New Yorker, Ruslan Maratovich Asainov, who became an ISIS sniper and sniper trainer, and another individual who became an emir for ISIS safehouses in the Idlib province of Syria. Asainov was convicted after trial in February 2023 of conspiracy to provide material support to ISIS, two substantive counts of providing material support to ISIS, one count of receiving military-type training from ISIS, and obstruction of justice. He is awaiting sentencing.

A foreign fighter recruited by the defendant was Jake Bilardi of Australia. Bilardi contacted the defendant in June 2014 for assistance in traveling to Syria to join ISIS. Kandic provided Bilardi – who had just turned 18 years old and had never traveled internationally before – with instructions and guidance for reaching Istanbul, Turkey. Kandic then arranged for Bilardi to be picked up at the airport in Istanbul and smuggled him into Syria. Kandic maintained contact with Bilardi as he became an ISIS fighter and ISIS suicide bomber. Bilardi went on to commit a suicide truck attack with fellow ISIS members on March 11, 2015, in Ramadi Iraq, killing himself, more than 30 Iraqi soldiers and an Iraqi policeman. Prior to the attack, the defendant wished Bilardi well and stated, “May Allah make there [sic] inner organs implode.” Bilardi’s attack was coordinated with others committed at the same time; 30 members of the Iraqi military were killed, 61 were injured, and 25 were missing, whose bodies were never found, all as a result of this coordinated series of attacks. After the attack, the defendant celebrated Bilardi’s service to ISIS, on Twitter and to a co-conspirator. A member of the Iraqi Army general staff testified at trial that the March 11, 2015, attack paved the way for ISIS’s takeover of Ramadi and the Anbar Province of Iraq several weeks later.

Kandic also provided battlefield intelligence to top ISIS leadership. He also shaped the information environment in which ISIS operated by enforcing ISIS media and publicity discipline. For example, the defendant directed other ISIS supporters to refrain from posting any information about the success (or failure) of ISIS recruitment efforts as well as to minimize any reporting about ISIS military action in specific military actions. Kandic managed money for ISIS fighters in Syria, including two ISIS fighters who gave the defendant their bank cards, from which bank records showed more than $40,000 was transacted. Kandic smuggled weapons to ISIS in Syria, including a night vision scope for an ISIS sniper. Kandic operated a private market via Telegram – called “Khilafah (Caliphate) Market” – for which he was the group administrator with authority to restrict access to the group. Members posted firearms and military equipment for sale, including mortars and suicide belts (i.e., improvised explosive devices). Among the members of Kandic’s private Telegram market was Abu Luqman, who, at the time, was the ISIS governor for the Raqqa province, ISIS’s de facto capital in Syria.

Assistant U.S. Attorneys Saritha Komatireddy and J. Matthew Haggans for the Eastern District of New York are prosecuting the case, with assistance from Paralegal Specialist Huda Abouchaer and Trial Attorney Jennifer Levy of the National Security Division’s Counterterrorism Section.

The Justice Department’s Office of International Affairs, the FBI’s Legal Attachés abroad and foreign authorities in multiple countries on three continents provided critical assistance in this case. The Bosnian and Herzegovina State Investigation and Protection Agency, the Bosnian and Herzegovina State Intelligence and Security Agency, the Bosnian and Herzegovina Foreigners’ Affairs Service, the Bosnian and Herzegovina State Prosecutor’s Office, the Ministry of Justice of Bosnia and Herzegovina, the Australian Federal Police, the Victoria Police (Australia), the Australian Border Force, the Australian Department of Foreign Affairs and Trade, the Australian Attorney-General’s Department, the Prosecutor General’s Office of the Republic of Kazakhstan, the Iraqi Ministry of Defense, Joint Operations Command in Iraq, and the FBI Legal Attaché Offices in Sarajevo, Canberra, Nur-Sultan, and Baghdad, provided extraordinary assistance in the investigation and prosecution. The Ministry of Justice for the Republic of Finland, and Federal Office of Justice in the Federal Republic of Germany, the Department of Justice & Constitutional Development in the Republic of South Africa and the central authorities responsible for mutual legal assistance in Albania, North Macedonia, Montenegro and Ukraine; and the FBI’s Legal Attaché Offices in those countries provided valuable support in the investigation.

Earlier today, Mirsad Kandic was sentenced by United States District Judge Nicholas G. Garaufis to life imprisonment following his May 2022 trial conviction on one count of conspiracy to provide material support to the Islamic State of Iraq and al-Sham (ISIS), and five substantive counts of providing material support to ISIS in the forms of personnel, including himself, Australian citizen Jake Bilardi, and others, as well as services, weapons, property, and equipment, and false documentation and identification, all between January 2013 and June 2017, when the defendant was arrested in Sarajevo, Bosnia and Herzegovina.  Kandic was convicted by a federal jury in May 2022 following a three-week trial in federal court in Brooklyn.

Breon Peace, United States Attorney for the Eastern District of New York, Matthew G. Olsen, Assistant Attorney General of the Justice Department’s National Security Division, Christie M. Curtis, Acting Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), Edward A. Caban, Acting Commissioner, New York City Police Department (NYPD), announced the sentence.

“Kandic was a high-ranking member of ISIS who relished the death and destruction he wrought while providing every conceivable form of material support to a terrorist organization, including the recruitment of countless others to ISIS’s bloody campaigns in Syria and elsewhere,” stated United States Attorney Peace.  “Today’s sentence holds the defendant accountable for his conduct and ensures that he will never again pose a threat to the United States or any of our allies.  This Office will remain relentless in prosecuting terrorists who threaten the safety and security of the United States and U.S. interests around the world.” 

“Serving ISIS’s deadly terror campaign, this defendant fought on the battlefield, spread propaganda, smuggled weapons, and radicalized Western recruits,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The National Security Division was created to counter foreign terrorist organizations like ISIS and, with our partners, we remain committed to identifying and holding accountable those who provide support to such terrorist groups.”

“Let this sentence affirm that HSI will not abide any individual or organization that threatens the national security of the United States,” said HSI New York Special Agent in Charge Ivan J. Arvelo. “Mirsad Kandic’s steadfast physical and material support of ISIS brought untold additional members into the organization, sowing death and destruction throughout ISIS territory and the world. This investigation and successful prosecution were only possible through the close collaboration of U.S. and international partners working together to track down those who provide support to foreign terrorist organizations and bring them to justice.”

As proven at trial, Kandic had multiple responsibilities within ISIS, including recruiting foreign fighters, trafficking foreign fighters from the West through Turkey and into Syria, and obtaining weapons, military equipment, maps, money, and false identifications for ISIS fighters.  In carrying out these responsibilities, Kandic worked directly with ISIS emirs and battlefield commanders, including Bajro Ikanovic, who commanded an ISIS training camp in Syria beginning in or around 2014.  Ikanovic, in turn, reported to Omar Shishani, then the top military commander for ISIS, and a key advisor to Abu Bakr al-Baghdadi, at the time the leader of ISIS and the self-declared Caliph of the Islamic State. 

After several failed attempts to travel from the United States to Istanbul, Turkey, Kandic took a two-day Greyhound bus ride from New York City to Monterrey, Mexico, in November 2013, and flew through Panama, Brazil, Portugal, Germany, Kosovo, and Turkey before arriving in Syria at the end of 2013.  Once in Syria, the defendant joined ISIS and became a fighter for the group in Haritan, an ISIS stronghold in the outskirts of Aleppo, wielding Russian-made PK machine guns and AK-47 assault rifles.

ISIS leadership then sent the defendant to Turkey to take up the role of smuggling foreign fighters and weapons into Syria from abroad, and to serve as an emir for ISIS media.  Kandic disseminated ISIS recruitment messages and gruesome propaganda using more than 120 Twitter accounts.  For example, the defendant sent out an ISIS-produced “documentary” titled the “Flames of War.”  This video celebrated ISIS atrocities and macabre executions of ISIS captives, including instances where victims were forced to dig their own graves before being summarily executed by gunshot.  The defendant tweeted that this video was the “best thing ever seen on screen.”

Kandic was a prolific recruiter of foreign fighters for ISIS.  He sent thousands of radicalized ISIS volunteer fighters from Western countries into ISIS-controlled territories in Syria and elsewhere in the Middle East.  This included a fellow New Yorker, Ruslan Maratovich Asainov, who became an ISIS sniper and sniper trainer, and another individual who became an emir for ISIS safehouses in the Idlib province of Syria. Asainov was convicted after trial in February 2023 of conspiracy to provide material support to ISIS, two substantive counts of providing material support to ISIS, one count of receiving military-type training from ISIS, and obstruction of justice.  He is awaiting sentencing. 

A foreign fighter recruited by the defendant was Jake Bilardi of Australia.  Bilardi contacted the defendant in June 2014 for assistance in traveling to Syria to join ISIS.  Kandic provided Bilardi—who had just turned 18 years old and had never traveled internationally before—with instructions and guidance for reaching Istanbul, Turkey.  Kandic then arranged for Bilardi to be picked up at the airport in Istanbul and smuggled him into Syria.  Kandic maintained contact with Bilardi as he became an ISIS fighter and ISIS suicide bomber.  Bilardi went on to commit a suicide truck attack with fellow ISIS members on March 11, 2015, in Ramadi Iraq, killing himself, more than 30 Iraqi soldiers, and an Iraqi policeman.  Prior to the attack, the defendant wished Bilardi well and stated, “May Allah make there [sic] inner organs implode.”  Bilardi’s attack was coordinated with others committed at the same time; 30 members of the Iraqi military were killed, 61 were injured, and 25 were missing, whose bodies were never found, all as a result of this coordinated series of attacks.  After the attack, the defendant celebrated Bilardi’s service to ISIS, on Twitter and to a co-conspirator.  A member of the Iraqi Army general staff testified at trial that the March 11, 2015 attack paved the way for ISIS’s takeover of Ramadi and the Anbar Province of Iraq several weeks later.

Kandic also provided battlefield intelligence to top ISIS leadership.  He also shaped the information environment in which ISIS operated by enforcing ISIS media and publicity discipline.  For example, the defendant directed other ISIS supporters to refrain from posting any information about the success (or failure) of ISIS recruitment efforts as well as to minimize any reporting about ISIS military action in specific military actions.  Kandic managed money for ISIS fighters in Syria, including two ISIS fighters who gave the defendant their bank cards, from which bank records showed more than $40,000 was transacted.  Kandic smuggled weapons to ISIS in Syria, including a night vision scope for an ISIS sniper.  Kandic operated a private market via Telegram—called “Khilafah (Caliphate) Market”—for which the he was the group administrator with authority to restrict access to the group.  Members posted firearms and military equipment for sale, including mortars and suicide belts, i.e., improvised explosive devices.  Among the members of Kandic’s private Telegram market was Abu Luqman, who, at the time, was the ISIS governor for the Raqqa province, ISIS’s de facto capital in Syria.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Saritha Komatireddy and J. Matthew Haggans are in charge of the prosecution, with assistance from Paralegal Specialist Huda Abouchaer, and Trial Attorney Jennifer Levy of the Counterterrorism Section of the National Security Division of the Department of Justice.

The Justice Department’s Office of International Affairs, the FBI’s Legal Attachés abroad, and foreign authorities in multiple countries on three continents provided critical assistance in this case.  The Department of State’s Regional Security Office in Sarajevo provided critical assistance in this case. In addition, the Office extends its appreciation to the Bosnian State Investigation and Protection Agency, the Bosnian State Intelligence and Security Agency, the Bosnian Foreigner’s Affairs Service, the Bosnian State Prosecutor’s Office, the Australian Federal Police, the Victoria Police (Australia), the Australian Border Force, the Australian Department of Foreign Affairs and Trade, the Australian Attorney-General’s Department, the Prosecutor General’s Office of the Republic of Kazakhstan, the Iraqi Ministry of Defense, Joint Operations Command in Iraq, and the FBI Legal Attaché Offices in Sarajevo, Canberra, Nur-Sultan, and Baghdad, for their extraordinary assistance in the investigation and prosecution.  The Office also thanks the Ministry of Justice for the Republic of Finland, the Stuttgart Police Department and Federal Office of Justice in the Federal Republic of Germany, the Department of Justice & Constitutional Development in the Republic of South Africa, and the central authorities responsible for mutual legal assistance in Albania, North Macedonia, Montenegro, and Ukraine; and the FBI’s Legal Attaché Offices in those countries for their assistance in the investigation.

The Defendant:

MIRSAD KANDIC
Age: 41
Brooklyn, New York; Kosovo

E.D.N.Y. Docket No. 17-CR-449 (NGG)

Related Defendants:

RUSLAN MARATOVICH ASAINOV
Age: 46
Syria and Bay Ridge, Brooklyn, New York

E.D.N.Y. Docket No. 19-CR-402 (NGG)

Earlier today, in federal court in Brooklyn, Jacob Daskal pleaded guilty to transportation of a minor with intent to engage in criminal sexual activity.  Today’s proceeding was held before United States District Judge Nicholas G. Garaufis.  As part of his guilty plea, the defendant agreed to a sentence within the range of approximately 14 to 17 ½ years’ imprisonment. As part of the plea Daskal is required to register as a sex offender.

Breon Peace, United States Attorney for the Eastern District of New York announced the guilty plea.  

“The defendant has admitted he abused his power, trust and position in the community by committing deplorable acts against a child in his care,” stated United States Attorney Peace.  “We want victims everywhere to hear this guilty plea as our Office’s continued declaration that no one is above the law and we will bring those who violate our children to justice.” 

Mr. Peace expressed his appreciation for the Federal Bureau of Investigation, New York Field Office, the Kings County District Attorney’s Office and the New York City Police Department.

As set forth in court filings, the defendant was the head of the Boro Park Shomrim Society (the “Shomrim”), a private, Orthodox Jewish crime-patrol group associated with the New York Police Department.  In the spring of 2017, as a result of his position with the Shomrim, the defendant was connected to a 15-year-old girl, whom he took into his home and groomed for sex.  Between August and November 2017, the defendant, then 58 years-old, subjected the 15-year-old victim to sexual acts. 

During the summer of 2017, the sexual conduct occurred primarily at Daskal’s house in Brooklyn, New York and at his summer house in South Fallsburg, New York.  The defendant frequently transported the victim between those locations by way of New Jersey.   At the end of August, the defendant, his family and the victim returned full-time to his house in Brooklyn, where the abuse continued.  As the school year started, the defendant helped the victim find a new school in Chicago, Illinois, and, in October 2017, she moved there to attend that school and live with another family.  While the victim was in Chicago, the defendant communicated with the victim via text message and over Skype video chat.  On or about November 5, 2017, the defendant traveled to Chicago for a day trip to visit the victim.  The defendant booked a hotel room in Chicago, and he brought the victim to the hotel for sexual intercourse and oral sex.  He flew back to New York that evening.

Throughout the abuse, the defendant instructed the victim to delete their communications and warned her not to tell anyone about their sexual relationship.  The defendant also used his position as a leader in their community to quiet the victim, bragging about his connections to law enforcement and warning her that it would ruin her life if she told anyone about their relationship. 

The government’s case is being handled by the office’s Civil Rights Section.  Assistant United States Attorneys Erin Reid and Genny Ngai are in charge of the prosecution with assistance from Litigation Analyst Ryan Costley. 

The Defendant:

JACOB DASKAL
Age:  64
Brooklyn, New York

E.D.N.Y. Docket No. 21-110 (NGG)

Earlier today, at the federal courthouse in Brooklyn, Vincent Ricciardo, also known as “Vinny Unions,” a captain in the Colombo crime family of La Cosa Nostra, pleaded guilty to racketeering related to his extortion of a high-ranking official of a Queens-based labor union (the “Labor Union”), loansharking, and conspiracy to commit money laundering.  Ricciardo is the last of the defendants indicted in 2021 and 2022 in connection with various offenses committed by members and associates of the Colombo crime family involving extortion, money laundering conspiracy, drug-trafficking, fraud and loansharking offenses.  Previously, Benjamin Castellazzo, the Colombo family underboss, pleaded guilty to money laundering conspiracy and Ralph DiMatteo, the Colombo consigliere, pleaded guilty to racketeering involving extortion and money laundering conspiracy.  Colombo family captains Theodore Persico, Jr., who was slated to become the crime family’s next boss, and Richard Ferrara also pleaded guilty to racketeering.  Other defendants convicted of racketeering included Colombo family soldier Michael Uvino and associates Thomas Costa and Dominick Ricciardo.

In addition, various employee welfare benefit plan brokers and providers, including Albert Alimena, Joseph Bellantoni, and Erin Thompkins, pleaded guilty to health care fraud conspiracy stemming from their agreement with Colombo family members to divert benefit funds to the Mafia family.  The guilty pleas took place before United States District Judge Hector Gonzalez. 

Breon Peace, United States Attorney for the Eastern District of New York, announced the guilty pleas.

“Today, there can be no doubt that the Colombo crime family has been decapitated as a result of the guilty pleas by its leadership and other facilitators of lucrative schemes,” stated United States Attorney Peace.  “This Office, and the outstanding prosecutors, Special Agents, and detectives responsible for this significant blow are nevertheless mindful of the resilience of organized crime and we will not relent in our efforts to dismantle, disrupt, and disable this destructive menace in our communities.”

Mr. Peace expressed his appreciation to the Federal Bureau of Investigation, New York Field Office (FBI), the New York City Police Department, the U.S. Department of Labor’s Employee Benefits Security Administration and Office of the Inspector General, the Nassau County Police Department, the New York City Department of Investigation, the U.S. Department of Labor, and the Department of Justice’s Organized Crime and Gang Section for their invaluable assistance in the investigation.

According to earlier court filings and facts presented during the guilty plea proceedings, the defendants and their co-conspirators committed a variety of crimes – including extortion, loansharking, fraud, and drug-trafficking – to enrich themselves and to promote the continued operation of the Colombo organized crime family of La Cosa Nostra.  The Colombo family’s administration, including boss Andrew Russo (who passed away during the pendency of the case), underboss Castellazzo and consigliere DiMatteo, as well captains Persico, Ferrara, and Vincent Ricciardo, agreed to use extortionate means, including threats of bodily harm, to force the official to give over a portion of his salary and, eventually, to take decisions at the Labor Union and with its affiliated healthcare benefit fund (the “Health Fund”) that would enrich the Colombo crime family’s administration, including attempts to force the trustees of the Health Fund to select vendors who were associated with the Colombo crime family and handpicked by some of the defendants.  The crime family’s administration sought to divert more than $10,000 per month from the Health Fund’s assets to the Mafia.

In addition, Castellazzo, DiMatteo, Persico, Ferrara, Ricciardo, and Uvino joined with defendants Alimena, Thompkins, and Bellantoni to devise a scheme to launder money from Health Fund contracts and vendor payments.  These defendants attempted to re-bid Health Fund vendor contracts for claims administration, pharmaceuticals, and other health services to persons and companies affiliated with Bellantoni, and to select a company run by Alimena as the Health Fund’s third-party administrator.   

Bonanno crime family soldier John Ragano, who was also known as “Bazoo” and the “Maniac,” also led a scheme to issue fraudulent workplace safety training certifications from two occupational safety schools he purported to operate in Long Island.   Rather than provide workplace safety trainings required to obtain Occupational Safety and Health Administration (OSHA) certification, Ragano along with John Glover and Domenick Ricciardo, falsified paperwork submitted to the U.S. Department of Labor and other government agencies which represented that hundreds of workers had completed construction safety training courses when they had not.  Instead, various defendants used Ragano’s schools to conduct meetings involving members of La Cosa Nostra and to store illegal drugs and fireworks.  In November 2022, Ragano pleaded guilty to conspiracy to commit fraud in connection with a means of identification.  He was sentenced in April 2023 to 57 months’ imprisonment.  In December 2022, Domenick Ricciardo pleaded guilty to racketeering and was sentenced in June 2023 to 28 months’ imprisonment.

When sentenced, Castellazzo, DiMatteo, Ferrara, Martino, Persico, Vincent Ricciardo, and Uvino each face up to 20 years in prison.  Costa faces up to 30 years in prison.  Glover faces up to 15 years in prison.  Alimena, Bellantoni, and Thompkins face up to 10 years in prison.   

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys James P. McDonald, Devon Lash, Michael W. Gibaldi, and Andrew Reich are in charge of the prosecution.

The Defendants:

ALBERT ALIMENA
Age: 69
Pompano Beach, Florida

JOSEPH BELLANTONI
Age: 41
Massapequa, New York

BENJAMIN CASTELLAZZO (also known as “Benji”)
Age: 85
Manahawkin, New Jersey

THOMAS COSTA
Age: 54
West Islip, New York

RALPH DIMATTEO
Age: 68
Merrick, New York

RICHARD FERRARA
Age: 61
Brooklyn, New York

JOHN GLOVER
Age: 64
Queens, New York

VINCENT MARTINO
Age: 45
Medford, New York

THEODORE PERSICO, JR. (also known as “Teddy”)
Age: 59
Brooklyn, New York

JOHN RAGANO (also known as “Bazoo” and the “Maniac”)
Age: 61
Franklin Square, New York

DOMENICK RICCIARDO
Age: 57
Franklin Square, New York

VINCENT RICCIARDO (also known as “Vinny Unions”)
Age: 77
Franklin Square, New York

ERIN THOMPKINS
Age: 55
Franklin Square, New York

MICHAEL UVINO
Age: 57
Garden City, New York

E.D.N.Y. Docket No. 21-CR-466 (S-1) (HG)

Earlier today, in federal court in Brooklyn, Lamel Miller was sentenced by United States District Judge Ann M. Donnelly to 108 months’ imprisonment following his conviction at trial in connection with the March 7, 2020 armed robbery of over $280,000 in cash from the Aqueduct Racetrack in Queens.  Last month, on June 14, 2023, Miller’s co-defendant, Lafayette Morrison, who was a racetrack security guard acting as an “inside man” during the robbery, was sentenced to 90 months’ imprisonment. 

Breon Peace, United States Attorney for the Eastern District of New York, John B. DeVito, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division (ATF), and Edward A. Caban, Acting Commissioner, New York City Police Department (NYPD), announced the sentences.

“These sentences are the finale to the armed robbery that played out like a Hollywood movie heist,” stated United States Attorney Peace.  “Miller and Morrison made the wrong bet in robbing the Aqueduct Racetrack and have been justly punished for their violent crimes.” 

“This sentencing clearly demonstrates that serious violent crime such as the armed robbery committed by the defendants; will be met with a corresponding response from law enforcement.” said ATF Special Agent-in-Charge John DeVito.  “The men and women of ATF SPARTA  investigate and arrest those who believe they can prey on New Yorkers without fear of consequences.  They can’t!  Thanks to the NYPD’s Queens Robbery Squad and U.S. Attorney's office for the outcome of this case.”

“The criminals involved in this ill-conceived robbery plot have earned meaningful prison sentences for their roles in its planning and execution,” stated NYPD Acting Commissioner Edward A. Caban. “I commend and thank the NYPD detectives and ATF agents on our Joint Robbery Task Force, and the prosecutors in the office of the U.S. Attorney for the Eastern District of New York, for their critical work on this important case.”

On October 21, 2022, a federal jury in Brooklyn convicted Morrison of Hobbs Act robbery and conspiracy to commit Hobbs Act robbery in connection with the March 7, 2020 armed robbery of more than $280,000 in cash from Aqueduct Racetrack in South Ozone Park, Queens.  Morrison and Miller were also convicted of brandishing a firearm in connection with the robbery.  Additionally, Morrison was convicted of obstruction of justice.  Miller previously pled guilty to the robbery in September 2022.

As proven at trial, at approximately 10 p.m. following the Gotham Day stakes races at Aqueduct, Miller and a co-conspirator, the third charged defendant, held up at gunpoint several racetrack employees – including Morrison, who was employed as a racetrack security guard – as they were transporting more than $284,000 in cash earnings to a vault.  Miller and the co-conspirator emerged from their hiding spot in a stairwell and confronted the employees at gunpoint, taking the cash and employees’ cell phones, and forcing the employees into a closet.  Miller and the co-conspirator then went to a hotel where they divided up the robbery proceeds; they each took $100,000 and gave the remaining $84,000 to Morrison, who had falsely posed as a victim during the robbery.  In reality, Morrison had served as the robbery crew’s “inside man,” providing information in advance about where and when the money would be transported to the Aqueduct Racetrack’s vault.  When interviewed by federal law enforcement officers after the robbery, Morrison repeatedly lied to officers, including by claiming to be a victim of the crime and misidentifying a photograph of his childhood friend, Miller. 

The government’s case is being prosecuted by Assistant United States Attorneys Matthew R. Galeotti and Rachel A. Bennek, with the assistance of paralegal specialist Anna November.  Assistant United States Attorney Claire Kedeshian of the Office’s Asset Recovery Section is in charge of asset forfeiture.

The Defendants:

LAMEL MILLER
Age:  41
Queens, New York

LAFAYETTE MORRISON
Age:  41
Queens, New York

E.D.N.Y. Docket No. 20-CR-216 (AMD)

Earlier today, in federal court in Central Islip, United States District Judge Joanna Seybert sentenced Bloods gang member Lawrence Lewis, also known as “L Boogs,” to life plus 22 years imprisonment following his conviction for the July 29, 2017 murder of John Birt, the 2014 forcible rape and sex trafficking of a Suffolk County woman, narcotics possession and distribution and witness tampering, as well as various firearms charges.  Lewis was convicted by a federal jury in November 2021 following a four-week trial.

Breon Peace, United States Attorney for the Eastern District of New York, Raymond A. Tierney, Suffolk County District Attorney, Christie M. Curtis, Acting Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI),  Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), and Rodney K. Harrison, Commissioner, Suffolk County Police Department (SCPD), announced the sentence.

“A mandatory life sentence is a fitting punishment for Lewis, a gang member who committed murder, rape, sex trafficking, and pushed drugs in our community,” stated Unites States Attorney Peace.  “Through his allegiance to the Bloods, the defendant caused considerable harm to others, and that decision has now permanently cost him his freedom.  I commend our prosecutors, and federal and local law enforcement partners for their collaborative work that has made Suffolk County safer as a result of the arrest and prosecution of this violent criminal.”

"The terror and violence this defendant unleashed on to Suffolk County is deplorable. Defendant Lewis's greed and thirst for power prompted him to commit murder, spread dangerous drugs throughout our communities and exploit those who owed him money by sex trafficking," stated Suffolk County District Attorney Tierney.  "Thanks to our strong partnership with U.S. Attorney Breon Peace and our local and federal law enforcement partners, the public will be protected from this defendant for life." 

“Today’s life sentence assures that Lawrence Lewis’ violent criminal behavior that plagued Long Island communities has been brought to a definitive conclusion,” said HSI Special Agent in Charge Ivan J. Arvelo. “While nothing can erase the pain and suffering endured by his victims, no one else will be harmed by this unrepentant individual who has shown a wanton disregard for human life. I am especially grateful to the HSI special agents and task force officers, the FBI, SCPD, and the prosecutorial team whose dedication and professionalism ensured that justice prevailed in this case.

“Lewis is a career criminal, who committed heinous acts without remorse, and caused irreparable damage to victims and their families," Suffolk County Police Commissioner Rodney K. Harrison said. "The Suffolk County Police Department will continue to work with our law enforcement partners to ensure perpetrators like Lewis never see freedom again and I commend Eastern District of New York for this result.”

Between January April 2004 and June 2019, Lewis utilized his membership in the Bloods street gang to distribute large quantities of cocaine base and heroin in Suffolk County.  In order to protect his supply of narcotics, and secure his ability to distribute his narcotics, Lewis possessed a number of firearms, including an AR-15 assault rifle, a pistol-grip 12-gauge shotgun, a Mossberg .22 caliber rifle and a Ruger .45 caliber semi-automatic pistol. 

Lewis also engaged in acts of extreme violence on the gang’s behalf.  In 2021, Lewis forced a Suffolk County woman into prostitution, forcing her to engage in commercial sex acts until she repaid a debt to him.  During the same period of time, Lewis forcibly raped the same woman.  In addition, on July 29, 2017, Lewis shot and killed John Birt, a member of the Crips gang, at the Illusions Gentlemen’s Club in Deer Park, New York.  While Birt and several friends posed for pictures inside the club.  Lewis and a fellow Bloods gang member approached, and Lewis’ associate attempted to display a Bloods hand signal.  An argument ensued.  Lewis produced a .25 caliber firearm and fatally shot Birt in the abdomen.  Following the shooting, Lewis confessed to the murder to a number of close acquaintances, even sending text messages stating that he was “sleeping good” and would “do it again.”  In the lead-up to his federal trial, Lewis and others acting on his behalf, made efforts to prevent several witnesses from testifying against him through the use of veiled and implicit threats of violence.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Christopher C. Caffarone, Mark E. Misorek, Anthony Bagnuola and Special Assistant United States Attorney Kathleen A. Kearon are in charge of the prosecution, with the assistance of Paralegal Specialist Samantha Schroder. 

The Defendant

LAWRENCE LEWIS (also known as “L Boogs”)
Age:  41
Residence: Calverton, New York  

E.D.N.Y. Docket No. 18-CR-187 (S-1) (JS)

Today, United States Attorney Breon Peace announced criminal charges against two defendants in connection with alleged Medicare and Medicaid fraudulent billing schemes.  The charges filed in federal court in Brooklyn are part of the Department of Justice’s 2023 National Health Care Fraud Enforcement Action.  Carlo Elomina Garcia, a licensed occupational therapist, and the owner of Carlo E. Garcia Occupational Therapy in Queens, was arrested and arraigned on June 26, 2023 and released on a $25,000 bond pending trial.  Jian Ai Chen, a medical assistant and the owner of two pharmacies in Brooklyn, was arrested and arraigned on June 14, 2023 before Chief United States Magistrate Judge Lois Bloom and released on a $500,000 bond pending trial. 

Merrick B. Garland, United States Attorney General; Breon Peace, United States Attorney for the Eastern District of New York; Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Christian J. Schrank, Deputy Inspector General for Investigations, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), announced the arrests and charges.

“These enforcement actions, including against one of the largest health care fraud schemes ever prosecuted by the Justice Department, represent our intensified efforts to combat fraud and prosecute the individuals who profit from it,” stated Attorney General Garland.  “The Justice Department will find and bring to justice criminals who seek to defraud Americans and steal from taxpayer-funded programs.” 

United States Attorney Peace stated, “As alleged, the defendants abused the trust placed in them by Medicare and Medicaid by falsely billing these essential programs for their own enrichment.  This enforcement action demonstrates our continued commitment to vigorously prosecute healthcare providers who steal from taxpayer-funded programs intended to help those in need.” 

“This nationwide enforcement action demonstrates that the Criminal Division is committed to fighting health care fraud and opioid abuse by prosecuting those who allegedly exploit patients and health care benefit programs for personal gain,” stated Assistant Attorney General Polite.  “Today’s announcement includes some of the largest and most complex cases that the Department has prosecuted and demonstrates the Department’s commitment to seeking justice for those at all levels of the healthcare industry who put profits above patient care, from professionals in doctors’ offices to executives in corporate boardrooms.” 

“In both of these cases, the defendants are alleged to have submitted fraudulent claims to Medicare and Medicaid for services and prescription medicine that were not provided.  Abuse of Medicare and Medicaid harms not only the programs but also the everyday people whose tax money is used to fund these healthcare programs.  The actions announced today highlight the FBI New York’s commitment to ensuring that those willing to attempt to take advantage of taxpayer-funded healthcare programs are held accountable in the criminal justice system,” stated FBI Assistant Director-in-Charge Driscoll.

“Federal health care programs are designed to provide access to high quality care to patients nationwide. When bad actors attempt to exploit those measures for illicit financial gain, they put greed before the needs and safety of their patients, and take valuable resources away from their intended recipients,” stated HHS-OIG Deputy Inspector General Schrank.  “As today’s enforcement action illustrates, HHS-OIG and our law enforcement partners are committed to defending the federal health care system against fraud.”

United States v. Carlo Elomina Garcia

As alleged in the criminal complaint, from May 2017 through June 2021, the defendant, through his company, billed Medicare and Medicaid for over $3.9 million in occupational therapy services and was paid over $1.6 million.  Many of those services were not eligible for reimbursement, were not provided as billed or were not provided at all, including repeatedly billing for over 24 hours of one-on-one occupational therapy services in a single day. 

The government’s case is being prosecuted by Assistant United States Attorney John Vagelatos. 

United States v. Jian Ai Chen

As alleged in the indictment, As alleged in the indictment, Chen is charged with conspiracy to defraud in connection with a scheme to pay over $5 million in kickbacks to Medicare and Medicaid beneficiaries in exchange for bringing their prescriptions to AC Pharmacy Corp. and A Star Pharmacy Inc., which she owned.  Chen agreed with others to submit false and fraudulent claims to Medicare and Medicaid plans for dispensing prescription medications that were induced by the payment of kickbacks and not actually dispensed.  Chen’s pharmacies received approximately $101 million as a result of the scheme. 

The government’s case is being prosecuted by Trial Attorney Andrew Estes of the Brooklyn Strike Force. 

The arrests and charges announced today by U.S. Attorney Peace are part of a strategically coordinated, two-week nationwide law enforcement action that resulted in criminal charges against 78 defendants for their alleged participation in health care fraud and opioid abuse schemes that included over $2.5 billion in alleged fraud.  The defendants allegedly defrauded programs entrusted for the care of the elderly and disabled, and, in some cases, used the proceeds of the schemes to purchase luxury items, including exotic automobiles and yachts.

The Health Care Fraud Unit’s Strike Forces in Brooklyn, Dallas, Detroit, the Gulf Coast, Houston, Los Angeles, Miami, Newark, and Tampa; the Health Care Fraud Unit’s National Rapid Response Strike Force; the U.S. Attorneys’ Offices for the Middle District of Florida, Southern District of Florida, Southern District of Georgia, District of Idaho, Western District of Kentucky, Eastern District of Louisiana, Middle District of Louisiana, District of New Jersey, Eastern District of New York, Southern District of Ohio, District of South Carolina, Southern District of Texas, Eastern District of Washington, and Eastern District of Wisconsin; and the State Attorney Generals’ Offices for Indiana, New York, and Pennsylvania are prosecuting these cases, with assistance from the Health Care Fraud Unit’s Data Analytics Team. Descriptions of cases involved in today’s enforcement action are available on the Department’s website at www.justice.gov/criminal-fraud/health-care-fraud-unit/2023-national-hcf-court-documents.

The charges are allegations, and the defendants are presumed innocent unless and until proven guilty.

The Fraud Section uses the Victim Notification System to provide victims with case information and updates related to cases charged by the Fraud Section in the National Health Care Fraud Enforcement Action. Victims with questions may contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance phone line at 1-888-549-3945 or by emailing victimassistance.fraud@usdoj.gov

The Defendants:

CARLO ELOMINA GARCIA
Age:  51
Astoria, Queens

E.D.N.Y. Docket No. 23-MJ-596

JIAN AI CHEN (also known as “Maggie”)
Age:  48
Syosset, New York

E.D.N.Y. Docket No. 23-CR-255 (WFK)

Today, a federal jury in Brooklyn returned guilty verdicts on all counts of a superseding indictment against Eric Goldstein, the former Chief Executive Officer of the New York City Department of Education’s (NYC DOE) Office of School Support Services, and Blaine Iler, Michael Turley and Brian Twomey, operators of a food services company, with conspiring to commit extortion under color of official right and solicitation and giving of bribes relating to programs receiving federal funds.  The verdict followed a 4-week, trial before Visiting U.S. Circuit Judge Denny Chin.  When sentenced for Conspiracy to Commit Hobbs Act Extortion, Hobbs Act Extortion, Conspiracy to Commit Federal Program Bribery, Federal Program Bribery, Conspiracy to Commit Honest Services Wire Fraud, and Honest Services Wire Fraud, the defendants each face up to 20 years in prison as well as forfeiture and restitution penalties.

Breon Peace, United States Attorney for the Eastern District of New York, announced the verdict.

“The defendants’ criminal conduct is a textbook example of choosing greed over the needs of our schools and the well-being of our children.  Our children depended on nutritious meals served in schools and instead, got substandard food products containing pieces of plastic, metal, and bones, which is unacceptable,” stated United States Attorney Peace.  “Today’s verdict demonstrates the consequences of corruptly placing personal profit over the public interests.”

Mr. Peace expressed his thanks to the Federal Bureau of Investigation, New York Field Office, for their outstanding investigative work on the case.

As proven at trial and contained in court filings, between 2008 and September 2018, Goldstein oversaw the management, budget, and operations of several NYC DOE departments, including the Office of Food and Nutrition Services (SchoolFood), which was responsible for managing the overall food service operation for all New York City public schools.  In early 2015, Iler, Turley, and Twomey created a food services company called SOMMA Food Group (SOMMA), to provide food products to retail and food service markets, including to K-12 schools across the United States. SOMMA promoted and sold yogurt, hamburgers, and antibiotic-free chicken products marketed under the brand name Chickentopia.

At or about the same time SOMMA was founded, Goldstein, Iler, Turley, and Twomey co-founded Range Meats Supply Company (RMSCO), to purchase grass-fed beef products that SOMMA, in turn, would then promote and sell under the brand name Range Meats to retail markets and New York City schools. At the same time, Iler, Turley, and Twomey partnered with Goldstein in RMSCO, Iler, Turley and Twomey began to promote SOMMA’s products to SchoolFood officials and employees, all of whom reported to Goldstein in his role as OSS Chief Executive.  During a meeting with Iler in New York in July 2015, Goldstein told him, “I’m going to buy a lot of f---ing chicken from you guys, let’s do the beef.”

Between 2015 and December 2016, defendants Iler, Turley, and Twomey provided numerous benefits to Goldstein, including enticing Goldstein with potentially lucrative business opportunities and monetary payments to RMSCO for Goldstein’s benefit. In exchange, Goldstein used his influence as head of SchoolFood to help Iler, Turley, and Twomey in SOMMA’s business dealings before SchoolFood.  Goldstein helped ensure that SchoolFood accepted SOMMA’s products for purchase, expedited the approval process and resolved disagreements between SOMMA and SchoolFood officials in SOMMA’s favor. The defendants purposefully concealed Goldstein’s ownership interest in RMSCO from the NYC DOE while Goldstein was using his influence and public position at NYC DOE to benefit SOMMA.

In the fall of 2016, SchoolFood stopped serving SOMMA’s chicken tenders after a NYC DOE employee choked on a bone that had not been removed from a chicken tender supplied by SOMMA.  Goldstein, who had final approval as to whether and when the chicken tenders would be allowed back in schools, delayed approving the reintroduction of the tenders until Iler, Turley, and Twomey agreed to transfer SOMMA’s ownership interest in RMSCO to Goldstein as well as to transfer $66,670 to a bank account in RMSCO’s name that Goldstein had opened and controlled.  Following weeks of negotiations, on November 29, 2016, Iler, Turley and Twomey agreed to pay the bribe Goldstein was soliciting and one day later, on November 30, 2016, Goldstein approved reintroduction of SOMMA’s chicken products in schools.  The products were served in schools until April 2017 when, following repeated complaints from students and staff that the chicken tenders continued to contain foreign objects. SchoolFood decided to remove all of SOMMA’s food products from New York City public schools.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Robert Polemeni, Andrew Grubin, Laura Zuckerwise, and Kaitlin McTague are in charge of the prosecution, with the assistance of Paralegal Specialists Rachel Friedman and Kavya Kannan. 

The Defendants:

ERIC GOLDSTEIN
Age: 55
New Rochelle, New York

BLAINE ILER
Age: 35
Dallas, Texas

MICHAEL TURLEY
Age: 54
Fayetteville, Arkansas

BRIAN TWOMEY
Age: 50
Dallas, Texas

E.D.N.Y. Docket No. 21-CR-550 (DC)

Earlier today, in federal court in Central Islip, Jami Anthony, the former Small Business Program Liaison and Procurement Officer for a Department of Energy (DOE) laboratory based in Virginia, pleaded guilty to a criminal information charging her with receiving bribes as a federal official in connection with a scheme to pay her more than $18,000 in exchange for more than $900,000 in DOE contracts. The proceeding was held before United States Magistrate Judge Anne Y. Shields.  When sentenced, Anthony faces up to 15 years in prison.  As part of her guilty plea, Anthony agreed to forfeit approximately $18,800.

Breon Peace, United States Attorney for the Eastern District of New York, and Teri L. Donaldson, Inspector General, DOE, announced the guilty plea.

“Motivated by greed, Anthony’s actions betrayed the Department of Energy and resulted in the purchase of electronic components that caused major fire damage to a government laboratory,” stated United States Attorney Peace.  “Corruption undermines the integrity of competitive bidding in the procurement process and will be aggressively prosecuted.”

Mr. Peace thanked the U.S. Department of Defense, Defense Criminal Investigative Service, for its work on the case.

Teri L. Donaldson, the Department of Energy Inspector General said, “Bribing public officials is terrible behavior.  Taking bribes when working as a public official representing the U.S government is even worse.  We simply will not tolerate these betrayals of the public’s trust.  We will continue to work with our partners at the Justice Department and the U.S. Attorney’s Offices to detect such behaviors and bring those involved to justice.”

Between approximately December 2017 and December 2020, Michael Montenes, the owner of M.S. Hi-Tech, Incorporated (MSHT), a Hauppauge-based distributor of electronic components, paid Anthony approximately $18,800 in bribes to induce her to enter into contracts for electronic components that MSHT supplied to the DOE’s Virginia laboratory.  Montenes mailed these payments, which ranged from $500 to $7,200, from Long Island to Anthony in Virginia.  In exchange for the bribes, Anthony awarded MSHT contracts worth more than $900,000, which represented 95% of all of MSHT’s sales to the DOE’s Virginia laboratory.  In July 2021, some of the electronic components that Anthony procured from MSHT for DOE based upon Montenes’s bribes failed and caused a fire, resulting in approximately $1.8 million in repairs and other costs to DOE. 

In May 2023, Montenes pleaded guilty to bribing Anthony.  He also faces up to 15 years in prison.  As part of his guilty plea, Montenes agreed to forfeit approximately $969,000 and to pay DOE more than $1.8 million in restitution.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Bradley T. King is in charge of the prosecution.

The Defendants:

JAMI ANTHONY
Age:  47
Hayes, Virginia

E.D.N.Y. Docket No. 23-CR-229 (JS)

Prosecution is Among the First of its Kind

Earlier today, at the federal courthouse in Brooklyn, two indictments were unsealed that detail criminal conspiracies by companies and employees based in China to manufacture and distribute fentanyl in the United States.  This prosecution is among the first ever in the United States to charge Chinese chemical manufacturing companies with supplying precursor chemicals used to make fentanyl to the United States.  

The first indictment charges Anhui Rencheng Technology Co. (Rencheng), Ltd., Anhui Moker New Material Technology Co., Shutong Wang and Shifang Ruan with conspiracy to manufacture and distribute fentanyl, manufacture of fentanyl, and other related offenses.  In addition, the indictment charges those same defendants, as well as Xinyu Zhao and Yue Gao, with illegally concealing their activities, including through customs fraud and introducing misbranded drugs into the United States marketplace.  The indictment also charges Rencheng, Wang, and Ruan with conspiracy to distribute butonitazene, a controlled substance. 

The second indictment charges Hefei GSK Trade Co., Ltd, also known as “Hebei Gesuke Trading Co. Ltd.” and “Hebei Sinaloa Trading Co., Ltd.”, and Ruiqing Li with similar offenses, including conspiracy to manufacture and distribute fentanyl, manufacture of fentanyl, conspiracy to distribute a List I chemical, distribution of a List I chemical, customs fraud conspiracy, introducing misbranded drugs into interstate commerce, and distribution of metonitazene, a controlled substance.

Merrick Garland, United States Attorney General, Breon Peace, United States Attorney for the Eastern District of New York, Lisa O. Monaco, United States Deputy Attorney General, and Anne Milgram, Administrator, Drug Enforcement Administration (DEA), Keechant, L. Sewell, Commissioner, New York City Police Department, and Steven A. Nigrelli, Acting Superintendent, New York State Police, announced the charges.

“As alleged, the defendants knowingly distributed the chemical building blocks of fentanyl to the United States and Mexico, even providing advice on how they should be used to manufacture this dangerous drug which inflicts untold tragedy in New York City, Long Island and across the nation,” stated United States Attorney Peace.  “This prosecution shows that the companies and individuals who fuel our nation’s deadly opioid epidemic—wherever they are located—will be found and prosecuted to the full extent of the law.”

“When I announced in April that the Justice Department had taken significant enforcement actions against the Sinaloa Cartel, I promised that the Justice Department would never forget the victims of the fentanyl epidemic,” said Attorney General Merrick B. Garland. “I also promised that we would never stop working to hold accountable those who bear responsibility for it. That includes not only going after the leaders of the Cartels, their drug and gun traffickers, their money launderers, security forces, and clandestine lab operators. It also includes stopping the Chinese chemical companies that are supplying the cartels with the building blocks they need to manufacture deadly fentanyl.”

“Today’s announcement is a down payment on our pledge to use every tool in the government’s arsenal, in every corner of the globe, to protect American communities,” said Deputy Attorney General Lisa O. Monaco. “The Justice Department will not rest or relent in investigating and prosecuting every link of the fentanyl supply chain, including the PRC companies and executives who produce and export vast quantities of the precursor chemicals the drug cartels need to peddle their poison. There can be no safe haven.”

“Today’s announcement is a considerable step forward in our unrelenting fight against fentanyl, targeting the threat where it starts,” said DEA Administrator Anne Milgram. “These companies and individuals are alleged to have knowingly supplied drug traffickers, in the United States and Mexico, with the ingredients and scientific know-how needed to make fentanyl – a drug that continues to devastate families and communities across the United States, killing Americans from all walks of life. Targeting entire criminal drug networks, from the source of supply to the last mile of distribution, is critical to saving American lives. DEA will not stop until this crisis ends.”

“Today’s charges are further proof of the unceasing, wide-ranging efforts the New York City Police Department will undergo to rid our city of illegal drugs,” stated NYPD Commissioner Sewell.  “No matter where or how this poison is manufactured and distributed, we are united with our local, state, federal, and international law-enforcement partners in the fight against drug traffickers. To that end, I thank and commend the U.S. Department of Justice, the Office of the U.S. Attorney for the Eastern District of New York, the U.S. Drug Enforcement Administration, the New York State Police, and everyone else involved in this case for their exceptional work.”

New York State Police Acting Superintendent Nigrelli stated, “The prosecution of these criminals reinforces that we will continue to be vigilant in stopping the flow of dangerous, illegal drugs into our country. The manufacturing and distribution of these highly addictive drugs perpetuates a cycle of substance abuse which poses a significant threat to safety and quality of life within our communities. Drug trafficking organizations of any kind will not be tolerated. I thank the U.S. Attorney’s Office for the Eastern District of New York and our law enforcement partners for their continuing commitment to identify, arrest and prosecute anyone who attempts to infiltrate these dangerous drugs into our nation.”

The misuse of fentanyl, a Schedule II controlled substance, has resulted in one of the deadliest drug threats the United States has ever faced.  It is a highly addictive synthetic opioid that is approximately 50 times more potent than heroin and 100 times more potent than morphine.

As alleged in the indictments, the defendant companies supplied precursor chemicals to the United States and Mexico, among other places, knowing they would be used to manufacture fentanyl.  The defendant companies openly advertised their products all over the world, including to the United States and Mexico, on social media platforms.  They also sent their chemical products to the United States and Mexico by boat and by air, using public and private international mail and package carriers.  To prevent detection and interception of chemical products at the borders, the defendant companies employed deceptive and fraudulent practices, such as mislabeling packages, falsifying customs forms, and making false declarations at border crossings.  The chemicals distributed by the defendants included all the materials necessary to manufacture fentanyl via the most common pathways.

The defendant companies attempted to obfuscate their distribution of fentanyl precursors by adding “masking” molecules, which slightly alter the chemical signature of the underlying precursor chemicals.  By changing the chemical signature, an altered substance could evade testing protocols and relevant regulations by appearing to be a new substance.  Such masking molecules are easily removed, thus enabling the purchaser to return the substance to its original form as a fentanyl precursor.  The defendant companies not only produced and distributed masked precursors, but also provided instructions about how to remove the masking molecules upon receipt, thus helping their customers to more effectively obtain banned precursors and produce fentanyl.  The defendants also gave instructions on how to improve fentanyl yield and advice on which chemicals to buy to replace banned precursor products.

Mexican drug trafficking organizations, including but not limited to the Sinaloa Cartel and the Jalisco New Generation Cartel, have increasingly availed themselves of the fentanyl precursors and masked fentanyl precursors developed and distributed by the defendant companies and companies like them.  The chemicals provided by the defendant companies have enabled such cartels and other drug trafficking organizations to produce fentanyl in clandestine laboratories in Mexico on a massive scale, for subsequent distribution in the United States and elsewhere. The materials and instructions provided by the defendant companies and companies like them have directly caused and contributed to the influx of deadly fentanyl into the United States.

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

The government’s case is being handled by the Office’s International Narcotics and Money Laundering section.  Assistant United States Attorneys Francisco Navarro, Erik Paulsen, Chand Edwards-Balfour, Adam Amir and Saritha Komatireddy are in charge of the prosecution with assistance from EDNY Special Agent George Dietz and Paralegal Specialist Bridget Donovan.  The joint investigation was conducted by the DEA New York, DEA Mexico, DEA Diversion Control Division, DEA Special Testing and Research Laboratory, United States Customs and Border Protection New York field office, IRS New York Division, and United States Postal Inspection Services of New York.  The Justice Department’s Office of International Affairs also provided assistance.

This effort is part of an OCDETF operation.  OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach.  Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF

The Defendants:

Anhui RENCHENG Technology Co., Ltd.
Hefei City, Anhui Province, China

Anhui MOKER New Material Technology Co.
Luyang District, Hefei City, Anhui Province, China

HEFEI GSK Trade CO., LTD, also known as “Hebei Gesuke Trading Co. Ltd.” and “Hebei Sinaloa Trading Co., Ltd.”
Shushan Economic Development Zone, Hefei City, Anhui Province, China

SHUTONG WANG, also known as “王书通”
China

Shifang RUAN, also known as “Eva” and “阮世芳”
China

Xinyu Zhao, also known as “Sarah” and “赵新”
China

Yue Gao, also known as “Ellie” and “高悦,”
China

HEFEI GSK Trade CO., LTD, also known as “Hebei Gesuke Trading Co. Ltd.” and “Hebei Sinaloa Trading Co., Ltd.”
China

Ruiqing Li, also known as “李瑞青”
China

E.D.N.Y. Docket Nos. 23-CR-263 and 23-CR-264

"Today we unsealed two indictments collectively charging eight defendants—including three Chinese chemical companies and five Chinese nationals—with, among other crimes, conspiring to manufacture and import fentanyl to the United States. These indictments are among the first in the nation —but not the last—involving companies that provide raw chemicals to drug traffickers knowing that these chemicals will be used to make and distribute fentanyl in the United States. 

These charges are the culmination of a year-long investigation, which uncovered that the defendant companies manufactured and stockpiled fentanyl precursors—the chemicals and substances used to manufacture fentanyl and employed chemists to help them market and sell the substances.

The defendant companies openly advertised their products all over the world, including on social media platforms. And while the defendants largely sold the components of fentanyl, most of which were ostensibly legal, they did so as conspirators and accomplices, knowing these substances would be used in a fentanyl manufacturing scheme.  As this prosecution shows, that is a crime.

This is akin to a company selling the components for a bomb, knowing they would be used to make an explosive.  We know too well that the witches brew of fentanyl chemicals cooked by the drug traffickers can be just as deadly.

The defendants sent their chemicals to the U.S. and Mexico by boat and air, using public and private international mail and package carriers. To prevent detection and interception of chemical products at the borders, the defendant companies employed deceptive and fraudulent practices, such as mislabeling packages as other innocuous products such as cosmetics or food additives, falsifying customs forms, and making false declarations at border crossings. 

The defendants also disguised known fentanyl precursors to avoid detection and seizure by law enforcement by adding “masking” molecules, thereby changing the chemical signature of the underlying precursor chemicals to make them harder to detect while passing through Customs and other inspections. 

These altered substances could evade testing protocols and relevant regulations by appearing to be a new substance.  Such masking molecules are easily removed, enabling the purchaser to return the substance to its original form. 

The defendants even provided instructions about how to remove the masking molecules, ensuring their customers were able to use the banned precursor chemicals to manufacture fentanyl. And the defendants gave instructions on how to increase the amount of fentanyl the precursors would produce and advice on which chemicals to buy to replace banned precursor products.

Our investigation also revealed the defendants’ connections to Mexican drug cartels.  The defendants communicated with suspected associates of the Sinaloa Cartel and the Cartel Jalisco New Generation in Mexico, advertised their “best-selling products in Mexico,” and even maintained warehouses in Mexico to store precursor chemicals.

The chemicals provided by the defendant companies have enabled cartels and other drug trafficking organizations to produce fentanyl in clandestine laboratories in Mexico on a massive scale, for subsequent distribution in the United States and elsewhere.  The materials and instructions provided by the defendant companies and companies like them have directly caused and contributed to the influx of deadly fentanyl into the United States.

The defendants hoped that by selling only the components of fentanyl, or by masking the chemical structures of precursors, or mislabeling their products, they could escape scrutiny and accountability.  This prosecution proves them wrong. 

To the companies and employees that supply fentanyl precursor chemicals knowing they will be used to make illegal fentanyl, you are drug suppliers, and you are also drug traffickers.  We will identify you and prosecute you to the full extent of the law.  

The charges brought today exemplify our Office’s battle against fentanyl, which is inflicting untold tragedy in New York City, Long Island, and across the nation. Approximately 80,000 Americans died from fentanyl or other synthetic opioids in 2021—more than gun and auto-related deaths combined.  We will not rest until this crisis is over.

Thank you to Attorney General Garland, Deputy Attorney General Monaco, and DEA Administrator Milgram for their leadership in combatting the fentanyl crisis. I’d also like to give special thanks to our law enforcement and agency partners, including DEA New York, DEA Mexico, DEA Diversion Control Division, DEA Special Testing and Research Laboratory, United States Customs and Border Protection’s New York field office, Internal Revenue Service’s New York Division, and United States Postal Inspection Services of New York.

I’d also like to thank the team from my Office who have worked tirelessly to protect our community, Francisco Navarro, Erik Paulsen, Chand Edwards-Balfour, and Adam Amir."

The Justice Department today announced the arrest of two individuals and the unsealing of three indictments in the Southern and Eastern Districts of New York charging China-based companies and their employees with crimes related to fentanyl production, distribution, and sales resulting from precursor chemicals. These indictments represent the first prosecutions to charge China-based chemical manufacturing companies and nationals of the People’s Republic of China (PRC) for trafficking fentanyl precursor chemicals into the United States. Specifically, the indictments allege the defendants knowingly manufactured, marketed, sold, and supplied precursor chemicals for fentanyl production in the United States in violation of federal law.

During these investigations, the Drug Enforcement Administration (DEA) seized more than 200 kilograms of fentanyl-related precursor chemicals, a quantity that could contain enough deadly doses to kill 25 million Americans.

Fentanyl is a highly addictive synthetic opioid that is 50 times more potent than heroin and 100 times more potent than morphine. Fentanyl and its analogues have devastated communities across the United States and are fueling the ongoing overdose epidemic, which the Centers for Disease Control and Prevention (CDC) recently estimated killed approximately 110,000 Americans in 2022. Fentanyl is now the leading cause of death for Americans ages 18 to 49. Fentanyl analogues, similar in chemical makeup and effect to fentanyl, can be even more potent and lethal than fentanyl.

“When I announced in April that the Justice Department had taken significant enforcement actions against the Sinaloa Cartel, I promised that the Justice Department would never forget the victims of the fentanyl epidemic,” said Attorney General Merrick B. Garland. “I also promised that we would never stop working to hold accountable those who bear responsibility for it. That includes not only going after the leaders of the Cartels, their drug and gun traffickers, their money launderers, security forces, and clandestine lab operators. It also includes stopping the Chinese chemical companies that are supplying the cartels with the building blocks they need to manufacture deadly fentanyl.”

“Today’s announcement is a down payment on our pledge to use every tool in the government’s arsenal, in every corner of the globe, to protect American communities,” said Deputy Attorney General Lisa O. Monaco. “The Justice Department will not rest or relent in investigating and prosecuting every link of the fentanyl supply chain, including the PRC companies and executives who produce and export vast quantities of the precursor chemicals the drug cartels need to peddle their poison. There can be no safe haven.”

“Today’s announcement is a considerable step forward in our unrelenting fight against fentanyl, targeting the threat where it starts,” said DEA Administrator Anne Milgram. “These companies and individuals are alleged to have knowingly supplied drug traffickers, in the United States and Mexico, with the ingredients and scientific know-how needed to make fentanyl – a drug that continues to devastate families and communities across the United States, killing Americans from all walks of life. Targeting entire criminal drug networks, from the source of supply to the last mile of distribution, is critical to saving American lives. DEA will not stop until this crisis ends.”

Southern District of New York

An indictment was unsealed in the Southern District of New York charging the China-based chemical company Hubei Amarvel Biotech Co. Ltd., aka AmarvelBio, (Amarvel Biotech), as well as its executives and employees Qingzhou Wang, 35, aka Bruce (Wang); Yiyi Chen, 31, aka Chiron (Chen); and Fnu Lnu, aka Er Yang and Anita (Yang), with fentanyl trafficking, precursor chemical importation, and money laundering offenses. Wang and Chen, both nationals of China, were expelled from Fiji on June 8, arrested by the DEA, and presented before U.S. Magistrate Judge Wes Reber Porter in Honolulu federal court on June 9. Wang and Chen were ordered detained in Honolulu and will appear in Manhattan federal court following their arrival in the Southern District of New York. Yang, also a national of China, is at large.

“The indictment unsealed today in the Southern District of New York is the next step in our fight against fentanyl,” said U.S. Attorney Damian Williams for the Southern District of New York. “Today, we target the very beginning of the fentanyl supply chain: the Chinese manufacturers of the raw chemicals used to make fentanyl and its analogues. We’ve charged a Chinese precursor chemical company. And that’s not all. We’ve charged and arrested some of the individuals who work at the company. That includes a corporate executive and a marketing manager. They’re in American handcuffs. And they’re going to face justice in an American courtroom.”

According to the allegations contained in the indictment and other court filings, Amarvel Biotech is a chemical manufacturer based in the city of Wuhan, in Hubei province, China, that has exported vast quantities of the precursor chemicals used to manufacture fentanyl and its analogues.

Amarvel Biotech has openly advertised online its shipment of fentanyl precursor chemicals to the United States and to Mexico, where drug cartels operate clandestine laboratories, synthesize finished fentanyl at scale, and distribute the deadly fentanyl into and throughout the United States. Through its website and a host of other storefront sites, Amarvel Biotech has targeted precursor chemical customers in Mexico, including by advertising fentanyl precursors as a “Mexico hot sale;” guaranteeing “100% stealth shipping” abroad; and posting to its websites documentation of Amarvel Biotech shipping chemicals to Culiacan, Mexico, the home city of the Sinaloa Cartel, one of the dominant drug trafficking organizations in the Western Hemisphere and which is largely responsible for the massive influx of fentanyl into the United States in recent years.

Amarvel Biotech has also endeavored to thwart law enforcement interdiction of its precursor chemical shipments. Amarvel Biotech has advertised, for example, the company’s ability to use deceptive packaging – such as packaging indicating the contents are dog food, nuts, or motor oil – to ensure “safe” delivery to the United States and Mexico.

Over the past eight months, during an undercover investigation by the DEA, Amarvel Biotech and its principal executive, Wang, its marketing manager, Chen, and its sales representative, Yang, shipped more than 200 kilograms from China to the United States of precursor chemicals used to make fentanyl and its analogues. Amarvel Biotech, Wang, Chen, and Yang shipped the precursors to the United States intending that the chemicals would be used to produce fentanyl and its analogues in New York, and they agreed to continue supplying multi-ton shipments of fentanyl precursors despite being told that Americans had died after consuming fentanyl made from the chemicals that the defendants had sold.

For example, on or about Nov. 17, 2022, a DEA confidential source (CS-1) wrote to Yang using an encrypted messaging application, “You know I making fentanyl,” and “Is not safe.”  Yang replied, “I know.” On or about Dec. 1, 2022, Yang wrote to CS-1, promising that CS-1 would be “happy with our product” and noting that CS-1 would “be able to synthesize fentanyl.” In exchange for payment in cryptocurrency, Amarvel Biotech thereafter shipped from China to New York approximately 999.7 grams of the fentanyl precursor 1-boc-4-AP, approximately 1,002.6 grams of the fentanyl precursor 1-boc-4-piperidone, and approximately 893.6 grams of the methamphetamine precursor methylamine.

In or about March 2023, Wang and Chen met in person with an individual whom CS-1 represented was CS-1’s boss but was in fact another DEA confidential source (CS-2). During the meeting, Wang and Chen discussed Amarvel Biotech’s ability to supply ton-quantities of fentanyl precursors to New York for CS-1 and CS-2’s fentanyl manufacturing operation. After CS-2 stated that CS-2 wanted a different formula for manufacturing fentanyl and that several of CS-2’s American customers had purportedly died, Wang and Chen advised they had “a lot of customers in America and Mexico” who could provide technical assistance with fentanyl production.

After March 2023, Amarvel Biotech, Wang, Chen, and Yang agreed to sell CS-1 and CS-2 approximately 210 kilograms of fentanyl precursors in exchange for payment in cryptocurrency. During an April 10 video call with Wang and Chen, CS-2 stated that the approximately 210 kilograms of fentanyl precursors would be used to manufacture approximately 50 to 55 kilograms of fentanyl – an amount that, as noted above, could contain approximately 25 million deadly doses.

In or about May 2023, Amarvel Biotech, Wang, Chen, and Yang sent to the United States the shipment ordered by CS-1 and CS-2. On or about May 5, the DEA retrieved the precursor shipment from a warehouse near Los Angeles. Lab testing confirmed the presence of a precursor chemical for a fentanyl analogue. In an encrypted messaging group chat with CS-1, CS-2, Wang, and Chen, Yang explained that “New York, the United States, has been strict in checking the precursors of the ‘final product’ some time ago, so for the sake of safety, this time it is sent to California.”

In or about June 2023, Wang and Chen met again with CS-2. During the meeting, Wang and Chen discussed with CS-2 a multi-ton order of fentanyl precursor chemicals. Wang and Chen also discussed the need to take additional measures to protect themselves from detection and interdiction of their shipments “because recently American government . . . seized some Mexican group and they followed the routes to China,” where the U.S. Government found “our competitor in China” – an apparent reference to fentanyl-related charges filed in the Southern District of New York and announced in April 2023 against, among others, leadership of the Sinaloa Cartel and certain China-based precursor chemical company executives.

DEA’s Special Operations Division Bilateral Investigations Unit investigated the case, with assistance from the DEA Bangkok Country Office, DEA Wellington Country Office, DEA Beijing Country Office, DEA Honolulu District Office, DEA New York Organized Crime Drug Enforcement Task Force (OCDETF), DEA Riverside District Office, DEA Special Testing Laboratory, the Justice Department’s Office of International Affairs, the Royal Thai Police Narcotics Suppression Bureau, the Fiji Police Force Narcotic Bureau, the Fiji Office of the Director of Public Prosecutions, and the U.S. Attorney’s Office for the District of Hawaii.

The Southern District of New York’s Office’s National Security and International Narcotics Unit is prosecuting the case.

Eastern District of New York

Two indictments were unsealed in the Eastern District of New York that detail criminal conspiracies by companies and employees based in China to manufacture and distribute fentanyl in the United States.

The first indictment charges Anhui Rencheng Technology Co. (Rencheng) Ltd.; Anhui Moker New Material Technology Co.; Shutong Wang; and Shifang Ruan, aka Eva, with conspiracy to manufacture and distribute fentanyl, manufacture of fentanyl, and other related offenses. In addition, the indictment charges those same defendants, as well as Xinyu Zhao, aka Sarah, and Yue Gao, aka Ellie, with illegally concealing their activities, including through customs fraud and introducing misbranded drugs into the U.S. marketplace. The indictment also charges Rencheng, Wang, and Ruan with conspiracy to distribute butonitazene, a controlled substance.

The second indictment charges Hefei GSK Trade Co. Ltd, aka Hebei Gesuke Trading Co. Ltd. and Hebei Sinaloa Trading Co. Ltd.; and Ruiqing Li with similar offenses, including conspiracy to manufacture and distribute fentanyl, manufacture of fentanyl, conspiracy to distribute a List I chemical, distribution of a List I chemical, customs fraud conspiracy, introducing misbranded drugs into interstate commerce, and distribution of metonitazene, a controlled substance.

“As alleged, the defendants knowingly distributed the chemical building blocks of fentanyl to the United States and Mexico, even providing advice on how they should be used to manufacture this dangerous drug which inflicts untold tragedy in New York City, Long Island, and across the nation,” said U.S Attorney Breon Peace for the Eastern District of New York. “This prosecution shows that the companies and individuals who fuel our nation’s deadly opioid epidemic – wherever they are located – will be found and prosecuted to the full extent of the law.”

As alleged in the indictments, the defendant companies supplied precursor chemicals to the United States and Mexico, among other places, knowing they would be used to manufacture fentanyl. The defendant companies openly advertised their products all over the world, including to the United States and Mexico, on social media platforms. They also sent their chemical products to the United States and Mexico by boat and by air, using public and private international mail and package carriers. To prevent detection and interception of chemical products at the borders, the defendant companies employed deceptive and fraudulent practices, such as mislabeling packages, falsifying customs forms, and making false declarations at border crossings. The chemicals distributed by the defendants included all the materials necessary to manufacture fentanyl via the most common pathways.

The defendant companies attempted to obfuscate their distribution of fentanyl precursors by adding “masking” molecules, which slightly alter the chemical signature of the underlying precursor chemicals. By changing the chemical signature, an altered substance could evade testing protocols and relevant regulations by appearing to be a new substance. Such masking molecules are easily removed, thus enabling the purchaser to return the substance to its original form as a fentanyl precursor. The defendant companies not only produced and distributed masked precursors, but also provided instructions about how to remove the masking molecules upon receipt, thus helping their customers to more effectively obtain banned precursors and produce fentanyl. The defendants also gave instructions on how to improve fentanyl yield and advice on which chemicals to buy to replace banned precursor products.

Mexican drug trafficking organizations, including but not limited to the Sinaloa Cartel and the Jalisco New Generation Cartel (CJNG), have increasingly availed themselves of the fentanyl precursors and masked fentanyl precursors developed and distributed by the defendant companies and companies like them. The chemicals provided by the defendant companies have enabled such cartels and other drug trafficking organizations to produce fentanyl in clandestine laboratories in Mexico on a massive scale, for subsequent distribution in the United States and elsewhere. The materials and instructions provided by the defendant companies and companies like them have directly caused and contributed to the influx of deadly fentanyl into the United States.

DEA New York, DEA Mexico, DEA Diversion Control Division, DEA Special Testing and Research Laboratory, U.S. Customs and Border Protection New York Field Office, IRS Criminal Investigation New York Division, and U.S. Postal Inspection Service New York investigated the case. The New York City Police Department,  the New York State Police, and the Justice Department’s Office of International Affairs provided assistance on the case.

The Eastern District of New York’s Office’s International Narcotics and Money Laundering Section is prosecuting the case.

This effort is part of an OCDETF operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at www.justice.gov/OCDETF

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

El Departamento de Justicia anunció hoy el arresto de dos individuos y la publicación de tres acusaciones formales en los distritos este y sur de Nueva York contra empresas con sede en China y sus empleados por crímenes relacionados a la producción, distribución y venta de fentanilo al vender precursores químicos. Estas acusaciones representan los primeros cargos contra empresas de manufactura química con sede en China y contra ciudadanos de la República Popular China por tráfico de precursores del fentanilo a los Estados Unidos. Específicamente, la acusación alega que los ahora acusados, a sabiendas, fabricaron, mercadearon, vendieron y ofertaron precursores químicos para producción de fentanilo en Estados Unidos en violación a la ley federal.

Durante estas investigaciones, la Agencia Antidorgas (DEA) decomisó más de 200 kilos de precursores relacionados al fentanilo, una cantidad que podía contener suficientes dosis mortales para matar a 25 millones de estadounidenses.

El fentanilo es un opioide sintético altamente adictivo que es 50 veces más potente que la heroína y 100 veces más fuerte que la morfina. El fentanilo y sus análogos han devastado comunidades en todo Estados Unidos y están alimentando la continua epidemia de sobredosis que los Centros para el Control y Prevención de Enfermedades (CDC) recientemente estimaron que mataron a aproximadamente 110 mil estadounidenses en 2022. El fentanilo es actualmente la principal causa de muerte de estadounidenses entre 18 y 49 años de edad. Los análogos del fentanilo, que tienen composición química y efectos similares al fentanilo, pueden ser aún más potentes y mortales que el fentanilo.

“Cuando anuncié en abril que el Departamento de Justicia había tomado acciones significativas contra el cártel de Sinaloa, prometí que el Departamento de Justicia nunca olvidaría a las víctimas de la epidemia de fentanilo,” dijo el Procurador General Merrick B. Garland. “También prometí que nunca dejaríamos de trabajar para hacer que rindan cuentas los que tienen responsabilidad en esto. Esto incluye no sólo ir tras los cabecillas de los cárteles, sus traficantes de drogas y armas, los que blanquean sus fondos, sus fuerzas de seguridad y sus operadores de laboratorios. También incluye a las empresas chinas que están proveyendo a los cárteles los materiales necesarios para fabricar el mortal fentanilo.”

“El anuncio de hoy es un primer pago de nuestra promesa de usar cada herramienta en el arsenal del gobierno, en cada rincón del planeta para proteger a las comunidades estadounidenses,” dijo la Subprocuradora General Lisa O. Monaco. “El Departamento de Justicia no descansará ni ralentizará en su investigación y proceso contra cada vínculo de la cadena de suministro de fentanilo, incluyendo empresas y ejecutivos en la República Popular China que producen y exportan vastas cantidades de precursores químicos que los cárteles necesitan para vender su veneno. No habrá lugar seguro para ellos.”

“EL anuncio de hoy es un considerable paso hacia adelante en nuestra lucha implacable contra el fentanilo, yendo contra la amenaza donde comienza,” dijo la Administradora de la DEA Anne Milgram. “Se alega que estas empresas e individuos a sabiendas proveyeron a narcotraficantes en Estados Unidos y México los ingredientes y el saber científico necesario para hacer fentanilo, una droga que continúa devastando a familias y comunidades en todo Estados Unidos, matando estadounidenses de todo tipo. Ir contra redes criminales de drogas completas, desde la fuente del suministro hasta la última milla de distribución es crucial para salvar vidas estadounidenses. La DEA no se detendrá hasta que termine esta crisis.”

Distrito Sur de Neuva York

Se abrió una acusación formal en el distrito sur de Nueva York contra la empresa química con sede en China Hubei Amarvel Biotech CO., Ltd., también conocida como AmarvelBio, (Amarvel Biotech), así como contra sus ejecutivos y empleados Qingzhou Wang, de 35 años de edad, también conocido como Bruce (Wang); Yiyi Chen, de 31 años de edad, también conocido como as Chiron (Chen); y Fnu Lnu, también conocido como Er Yang y Anita (Yang), por tráfico de fentanilo, importación de precursores químicos y lavado de dinero. Wang y Chen ambos son ciudadanos chinos expulsados de Fiji el 8 de junio y arrestados por la DEA y presentados ante el juez magistrado de Estados Unidos Wes Reber Porter en una corte federal en Honolulu el 9 de junio. Se ordenó la detención de Wang y Chen en Honolulu y comparecerán ante una corte federal en Manhattan tras su arribo al distrito sur de Nueva York. Yang, de nacionalidad china, está prófugo.

“La acusación revelada hoy en el Distrito Sur de Nueva York es el próximo paso en nuestra lucha contra el fentanilo,” dijo el fiscal federal Damian Williams. “Hoy vamos contra el mero inicio de la cadena de suministro del fentanilo: los fabricantes chinos de materias primas usadas para hacer fentanilo y sus análogos. Hemos acusado a una empresa china de precursores químicos. Y eso no es todo. Hemos acusado y arrestado a algunos individuos que trabajan para la empresa. Eso incluye a un ejecutivo corporativo y un gerente de mercadeo. Están en custodia estadounidense. Y enfrentarán la justicia en un juicio estadounidense.” 

De acuerdo a los alegatos contenidos en la acusación y otros documentos de corte, Amarvel Biotech es un fabricante de químicos con sede en la ciudad de Wuhan en la provincia Hubei de China que ha exportado vastas cantidades de precursores químicos para fabricar fentanilo y análogos.

Amarvel Biotech ha abiertamente anunciado en línea sus embarques de precursores químicos del fentanilo a Estados Unidos y México, donde cárteles de la droga operan laboratorios clandestinos, sintetizan el fentanilo terminado a escala, y distribuyen la mortal droga en los Estados Unidos. Mediante su página web y otros sitios fachada, Amarvel Biotech ha buscado clientes de precursores químicos en México, incluyendo anunciando precursores químicos del fentanilo como “hot sale México”, garantizando “envío 100% secreto” al extranjero y subiendo a sus sitios documentos de embarques a Culiacán, Sinaloa, sede del cártel de Sinaloa, una de las organizaciones narcotraficantes dominantes en el hemisferio occidental y que es mayormente responsable por el flujo masivo de fentanilo a Estados Unidos en años recientes.

Amarvel Biotech ha buscado frustrar las acciones de interdicción de procuración de justicia de sus precursores químicos. La empresa ha anunciado, por ejemplo, el uso de empaques engañosos, tales como empaques que indican que los contenidos son comida para perro, nueces o aceite de motor para garantizar la entrega “segura” a Estados Unidos y México.

En los últimos ocho meses, durante una investigación encubierta de la DEA, Amarvel Biotech y su principal ejecutivo, Wan, su gerente de mercadeo Chen, y su representante de ventas Yang, enviaron más de 200 kilos de China a los Estados Unidos para precursores químicos usados para hacer fentanilo y sus análogos. Amarvel Biotech, Wang, Chen, y Yang enviaron precursores a Estados Unidos con la intención de que los químicos se usaran para producir fentanilo y sus análogos en Nueva York, y acordaron continuar proveyendo embarques de múltiples toneladas de precursores de fentanilo a pesar de que se les dijo que estadounidenses habían muerto tras consumir fentanilo hecho con los químicos que ofertaron los acusados.

Por ejemplo, alrededor del 17 de noviembre de 2022, una fuente confidencial de la DEA (llamada CS-1) le escribió a Yang diciéndole en una aplicación de mensajes encriptados, “Sabes que estoy fabricando fentanilo” y “No es seguro”. Yang replicó: “Lo sé”. Alrededor del 1 de diciembre de 2022 Yang le escribió a CS-1, prometiéndole que CS-1 estaría “contento con el producto” y destacando que CS-1 podría “sintetizar fentanilo”. A cambio de pago en criptomonedas, Amarvel Biotech envió de China a Nueva York aproximadamente 999.7 gramos del precursor de fentanilo 1-boc-4-AP, aproximadamente 1,002.6 gramos del precursor de fentanilo 1-boc-4-piperidone, y aproximadamente 893.6 gramos de precursor de metanfetaminas metilamina.

Alrededor de marzo de 2023, Wang y Chen se reunieron en persona con un individuo a quien CS-1 presentó como su jefe, pero que era en realidad otra fuente confidencial de la DEA (CS-2). Durante la reunión, Wang y Chen dialogaron sobre la habilidad de Amarvel Biotech de entregar toneladas de precursores de fentanilo a Nueva York a la operación de manufactura de fentanilo de CS-1 y CS-2. Cuando CS-2 indicó que quería una fórmula diferente de manufactura de fentanilo y que varios de sus clientes habían muerto, Wang y Chen le dijeron que tenían “muchos clientes en Estados Unidos y México” que podían ofrecer asistencia técnica con la producción de fentanilo.

En o alrededor de marzo de 2023, Amarvel Biotech, Wang, Chen y Yang acordaron vender a CS-1 y a CS-2 aproximadamente 210 kilos de precursores de fentanilo a cambio de pago en criptomoneda. Durante una videollamada el 10 de abril con Wang y Chen, CS-2 declaró que aproximadamente 210 kilos de precursores de fentanilo podían ser usados para fabricar aproximadamente entre 50 y 55 kilos de fentanilo, una cantidad que como se estableció anteriormente, podía producir 25 millones de dosis mortales.  

Alrededor de mayo de 2023, Amarvel Biotech, Wang, Chen, y Yang enviaron a los Estados Unidos la orden requerida por CS-1 y CS-2. Alrededor del 5 de mayo, la DEA decomisó el embarque de precursores de una bodega cerca de Los Ángeles. Pruebas de laboratorio confirmaron la presencia de un precursor químico de un análogo de fentanilo. En un mensaje encriptado en un chat grupal con CS-1 y CS-2, Wang y Chen, Yang explicó que “Nueva York, Estados Unidos, ha sido estricto en la revisión de precursores del ‘producto final’ desde hace un tiempo. Por seguridad, esta vez lo enviamos a California”.

Alrededor de junio de 2023, Wang y Chen se reunieron nuevamente con CS-2. Durante la reunión, Wang y Chen hablaron con CS-2 sobre una orden de varias toneladas de precursores de fentanilo. Wang y Chen también hablaron de la necesidad de tomar medidas adicionales para protegerse de ser detectados o que sus embarques fueran decomisados “porque recientemente el gobierno estadounidense… decomisó a un grupo mexicano y rastrearon sus rutas hasta China”, donde el gobierno estadounidense encontró “a nuestro competidor en China” – en aparente referencia a los cargos por fentanilo anunciados en el distrito sur de Nueva York y anunciados en abril de 2023 contra, entre otros, líderes del cártel de Sinaloa y ciertos ejecutivos de empresas de precursores con sede en China.

La Unidad de Investigaciones Bilaterales de la División de Operaciones Especiales de la DEA investigó el caso, con apoyo de la oficina de la DEA en Banghkok, la oficina de DEA en Wellington, la oficina de DEA en Beijing, la oficina de distrito de DEA en Honolulu, la Fuerza de Trabajo de la DEA contra Drogas y Crimen Organizado de Nueva York (OCDETF), la oficina de DEA en el distrito Riverside, el Laboratorio de Pruebas Especiales de DEA, la Oficina de Asuntos Internacionales del Departamento de Justicia, el Buró de Supresión de Narcóticos de la la Real Policía de Tailandia, el Buró de Narcóticos de la Policía de Fiji, la oficina de Fiji del Director de Procesos Públicos y la oficina del fiscal federal para el Distrito de Hawaii.

El Distrito Sur de la Oficina en Nueva York de Seguridad Nacional y la Unidad de Narcóticos Internacionales están llevando el caso.

Distrito Este de Nueva York

Dos acusaciones se presentaron en el Distrito Este de Nueva York que detallan las conspiraciones criminales de empresas con sede en China y empleados por fabricar y distribuir fentanilo en Estados Unidos.

La primera acusación formal es contra Anhui Rencheng Technology Co. (Rencheng) Ltd.; Anhui Moker New Material Technology Co.; Shutong Wang; y Shifang Ruan, también conocida como Eva, por conspiración para fabricar y distribuir fentanilo, fabricar fentanilo y otras ofensas relacionadas. Además, la acusación es contra esos mismos acusados, así como Xinyu Zhao, también conocida como Sarah, y Yue Gao, también conocida como Ellie, por ilegalmente encubrir sus actividades, incluyendo mediante fraude aduanal e introducción de medicamentos mal etiquetados al mercado estadounidense. La acusación también es contra Rencheng, Wang y Ruan por conspiración para distribuir butonitazeno, una sustancia controlada.

La segunda acusación es contra Hefei GSK Trade Co. Ltd, también conocida como Hebei Gesuke Trading Co. Ltd. y Hebei Sinaloa Trading Co. Ltd.; y Ruiqing Li por ofensas similares, incluyendo conspiración de manufacturar y distribuir fentanilo, manufactura de fentanilo, conspiración de distribuir un químico de la Lista I, distribución de químico de la Lista I, conspiración de fraude aduanal, introducción de medicamentos mal etiquetados a comercio interestatal, y distribución de metonitazona, una sustancia controlada.

“Como se alega, los acusados distribuyeron a sabiendas los químicos con los que se hace el fentanilo a Estados Unidos y México, y ofrecieron consejos de cómo debían ser usados para fabricar esta peligrosa droga, que produce una tragedia sin precedentes en Nueva York, Long Island y en toda la nación,” dijo el fiscal federal Breon Pace del distrito Este de Nueva York. “Este proceso judicial muestra que encontraremos a las empresas e individuos que alimentan la mortal epidemia de opioides de nuestra nación, donde sea que se estén, y les llevaremos en proceso hasta las últimas consecuencias de la ley.”

Como se alega en las acusaciones, las empresas acusadas proveyeron precursores químicos a Estados Unidos y a México, entre otros lugares, a sabiendas de que se usarían para fabricar fentanilo. Las empresas acusadas abiertamente anunciaron sus productos en todo el mundo, incluyendo en Estados Unidos y en México, en plataformas de redes sociales. También enviaron sus productos químicos a Estados Unidos y México por barco y avión, usando correo público y privado y transportistas. Para prevenir la detección e intercepción de los productos químicos en las fronteras, las empresas acusadas usaron prácticas engañosas y fraudulentas, como etiquetar de manera errónea los paquetes, falsificar declaraciones aduanales y hacer declaraciones falsas en cruces fronterizos. Los químicos distribuidos por los acusados incluyeron todos los materiales necesarios para fabricar fentanilo del modo más común.

Las empresas acusadas intentaron ofuscar su distribución de precursores de fentanilo al agregar moléculas que “enmascaraban”, lo que alteraba levemente la firma química del precursor. Al cambiar esta firma química, una sustancia alterada podía evadir los protocolos de pruebas y los reglamentos relevantes, aparentando ser una nueva sustancia. Estas moléculas se pueden quitar de manera fácil, permitiendo al comprador regresar la sustancia a su forma original como precursor de fentanilo. Las empresas acusadas no sólo produjeron y distribuyeron precursores “enmascarados”, sino que también ofrecieron instrucciones de como eliminar estas moléculas tras la recepción, ayudando así a sus clientes a obtener de manera más eficaz precursores prohibidos y producir fentanilo. Los acusados también dieron instrucciones sobre cómo mejorar la cantidad producida de fentanilo y consejos sobre qué químicos comprar para remplazar precursores prohibidos.

Organizaciones mexicanas de tráfico de drogas, incluyendo pero no exclusivamente el cártel de Sinaloa y el cártel Jalisco Nueva Generación (CJNG), se han abastecido cada vez más de precursores de fentanilo y precursores “enmascarados” de fentanilo desarrollados y distribuidos por las empresas acusadas y otras empresas similares. Los químicos que ofrecían estas empresas han permitido a estos cárteles y otras organizaciones narcotraficantes producir fentanilo en laboratorios clandestinos de México a escala masiva para su posterior distribución a Estados Unidos y otras partes. Los materiales y las instrucciones ofrecidas por las empresas acusadas y empresas similares han causado directamente y han contribuido directamente al flujo del mortal fentanilo a los Estados Unidos.

Las oficinas de DEA en Nueva York, México, Diversion Control, el Laboratorio Especial de Pruebas e Investigación de la DEA, así como la oficina de campo de Nueva York de Aduanas y Protección Fronteriza, la División de Investigación Criminal de Nueva York del Servicio de Rentas Internas, y la Oficina de Inspección Postal de Nueva York investigaron el caso. El Departamento de Policía de Nueva York, la Policía Estatal de Nueva York y la Oficina de Asuntos Internacionales del Departamento de Justicia ofrecieron asistencia.

El distrito este de la Oficina de Narcóticos y Lavado de Dinero Internacional está llevando el caso.

El esfuerzo es parte de una operación de OCDEFT. OCDETF identifica, interrumpe y desmantela las organizaciones criminales de más alto nivel que amenazan a Estados Unidos usando un enfoque integral llevado por fiscales y por inteligencia. Más información sobre el Programa OCDETF disponible en www.justice.gov/OCDETF.

Una acusación formal es un mero alegato. Se presume inocente a todos los acusados hasta que se muestre su culpabilidad más allá de duda razonable en una corte de ley.

A 48-count, superseding indictment was unsealed today in federal court in Brooklyn charging 23 alleged members and associates of the violent transnational criminal organization La Mara Salvatrucha, also known as the “MS-13,” with racketeering conspiracy and related offenses, including multiple murders and other acts of violence, drug distribution conspiracy, and money laundering conspiracy.  The superseding indictment adds charges against defendant Edenilson Velasquez Larin, also known as “Agresor,” “Saturno,” and “Paco,” who is allegedly a national leader of the MS-13 and the Fulton Locos Salvatruchas (Fulton) clique, for his leadership role in allegedly ordering murders, drug distribution, and money laundering for the MS-13. 

The superseding indictment also adds charges against defendants Christian Alas Leon, Carlos Alvarado, Jose Arevalo Iraheta, Jose Espinoza Sanchez, Erick Galdamez Leon, Blanca Garcia, Jose Guevara Aguilar, Oscar Hernandez Baires, Keila Hernandez May, Jose Mejia Hernandez, and Erick Zavala Hernandez—all of whom are alleged members or associates of the Fulton clique.  Finally, the superseding indictment adds charges against Leyla Carranza for her alleged participation in the murder of Andy Peralta on April 23, 2018.  The superseding indictment also includes charges against defendants Oscar Flores-Mejia, Ramiro Gutierrez, Yonathan Hernandez, Victor Lopez, Tito Martinez-Alvarenga, Emerson Martinez-Lara, Tylor Salmeron and Ismael Santos-Novoa, all of whom were previously indicted and arrested.

Alas Leon, Carlos Alvarado, Arevalo Iraheta, Galdamez Leon, Guevara Aguilar, Mejia Hernandez, and Zavala Hernandez were arrested earlier this morning in New York, and are scheduled to be arraigned this afternoon before United States Magistrate Judge Cheryl L. Pollak at the federal courthouse in Brooklyn.  Hernandez Baires was arrested in New Jersey and will have his initial appearance in Brooklyn.  Carranza was arrested in Virginia and will have her initial appearance in the Eastern District of Virginia.  Garcia was arrested in Colorado and will have her initial appearance in the District of Colorado.  Espinoza Sanchez and Hernandez May were arrested in North Carolina and will have their initial appearances in the Middle District of North Carolina.  Velasquez Larin is in immigration custody in Ohio and will have his initial appearance in the Northern District of Ohio at a later date.  The remaining defendants are already in federal custody and will be arraigned on the superseding indictment at a later date.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Ivan J. Arvelo, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York, and Keechant L. Sewell, Commissioner, New York City Police Department (NYPD), announced the arrests and charges.

“The murders and other crimes of violence allegedly committed by these defendants were brutal, cold-blooded, and utterly senseless,” stated United States Attorney Peace.  “This Office and our law enforcement partners are working tirelessly to dismantle the MS-13 at all of its levels, and we will not relent until this transnational criminal organization, its leaders, members, and associates are held accountable for the extreme violence and other criminal activity that they have perpetrated in our communities.”

Mr. Peace also thanked the Nassau County District Attorney’s Office, Queens County District Attorney’s Office, Nassau County Police Department, and the United States Attorney Offices for the Northern District of Ohio, District of New Jersey, District of Colorado, and Middle District of North Carolina for their valuable coordination with the investigation.

“The defendants charged are alleged to have participated in heinous gang violence and criminal behavior that brought fear and terror to our communities.  The indictments today mark another success in our fight against the continued threat posed by MS-13.  The FBI Long Island Gang Task Force and our law enforcement partners are determined to eliminate the scourge of violence and criminal behavior brought by MS-13,” stated FBI Assistant Director-in-Charge Driscoll.

“Transnational gangs, like MS-13, threaten our national security and the safety of our neighborhoods by ravaging our communities with violent crime and narcotics,” stated HSI New York Special Agent-in-Charge Arvelo.  “The individuals charged today are alleged to have committed numerous acts of senseless violence in the name of loyalty to their gang and now, thanks to the diligent investigative work of HSI New York and our partners at the FBI and NYPD, they will face federal prosecution for their crimes. This coordinated multi-agency law enforcement effort is the best means of disrupting MS-13’s illicit gang activity and undermining its ability to reign terror and violence in New York communities and elsewhere.”

“Today’s charges again show that NYPD investigators, in close collaboration with our law enforcement partners, are relentless in seeking justice against gangs – no matter when or where their brutal violence is carried out,” stated NYPD Commissioner Keechant L. Sewell. “I thank and commend Homeland Security Investigations, the FBI’s New York Field Office, and the Office of the U.S. Attorney for the Eastern District of New York for their vital work on this important case.”

Murder of Andy Peralta

Alleged MS-13 associates Juan Amaya-Ramirez and Oscar Flores-Mejia were previously charged with the murder of 17-year-old Andy Peralta in Kissena Park in Flushing, Queens on April 23, 2018.  The superseding indictment adds murder charges against Leyla Carranza, who allegedly lured Peralta to the park so that he could be murdered.  As detailed in court filings, the assailants fatally beat, stabbed and strangled Peralta.  Peralta’s killers photographed themselves posing over Peralta’s corpse while they displayed MS-13 gang signs with their hands.  The photo was found in Amaya-Ramirez’s iCloud account during a court-authorized search of the account.

Murder of Victor Alvarenga

In the early morning hours of November 4, 2018, MS-13 members shot and killed Victor Alvarenga near his home in Flushing, Queens.  Alleged MS-13 member Ramiro Gutierrez and others were previously charged for their roles in the murder.  The superseding indictment adds charges against alleged MS-13 members Edenilson Velasquez Larin, Jose Espinoza Sanchez, and Tito Martinez-Alvarenga.  As alleged, as a national leader for the MS-13 and a leader of the Fulton clique, Edenilson Velasquez Larin gave the order to kill Alvarenga, and the murder was overseen by Espinoza Sanchez.

Murder of Abel Mosso

Alleged MS-13 members Ramiro Gutierrez, Tito Martinez-Alvarenga and Victor Lopez were previously charged with the murder of Abel Mosso on a subway platform in Queens.  The superseding indictment charges Emerson Martinez-Lara and Ismael Santos-Novoa for their alleged roles as lookouts during the murder.  As alleged, in the early afternoon of February 3, 2019, Lopez and Martinez-Alvarenga followed Mosso, who they believed to be a member of the rival 18th Street gang, onto the No. 7-train at the Main Street station in Flushing, trailed by Gutierrez.  Lopez and Martinez-Alvarenga assaulted Mosso inside the subway car and then dragged him out onto the platform at the 90th Street station in Jackson Heights.  The defendants pulled out a gun, but Mosso wrestled it away.  Gutierrez shouted in Spanish, “Nobody get involved, we’re MS-13, we’re going to kill him.”  Gutierrez then grabbed the gun from Mosso and allegedly shot him multiple times, killing him.

Murder of Eric Monge

The superseding indictment adds charges for the murder of Eric Monge on September 6, 2020.  Alleged MS-13 member Oscar Hernandez Baires is charged with murdering Eric Monge, a fellow member of MS-13 who had previously assaulted Hernandez Baires.  As alleged, in the early morning hours of September 6, 2020, Hernandez Baires and another individual shot and killed Monge while he was seated in a parked car near his home in Queens.  Monge’s wife had just taken their young children into their residence and returned to the car to find parking when Hernandez Baires and the other individual opened fire.

Conspiracy to Murder Rival Gang Members

Beginning in late 2019, alleged MS-13 member Jose Espinoza Sanchez, who was a leader of the gang’s Fulton clique, learned that members of the rival 18th Street gang were increasing their presence in Elmont, New York, which is part of Fulton’s territory.  As leaders of the Fulton clique, Edenilson Velasquez Larin and Espinoza Sanchez allegedly ordered other MS-13 members, including alleged MS-13 members Jose Arevalo Iraheta, Oscar Hernandez Baires, and Erick Zavala Hernandez, to scour the Elmont neighborhood in search of 18th Street members to kill.  In the spring of 2020, Velasquez Larin allegedly arranged for Fulton members from Maryland to travel to New York to help Fulton members from New York find rival gang members in Elmont.  Alleged MS-13 member Jose Arevalo Iraheta and a Fulton member from Maryland ultimately found an individual they believed to be an 18th Street member and shot at him.

Attempted Murders in Summer 2021

On the evening of July 29, 2021, in Westbury, alleged MS-13 member Christian Alas Leon and others chased a member of the rival Latin Kings gang with machetes.  Alas Leon and another individual slashed the individual multiple times in his back and head with machetes before the victim managed to escape.

As retaliation for the machete attack, a different Latin Kings member stabbed an MS-13 member in the chest.  In response to that stabbing, members of the Fulton clique met at a public park in Hicksville and agreed to exact revenge by killing a Latin Kings member.  Velasquez Larin, the leader of the clique, participated in the meeting by telephone and allegedly gave the order to kill.  Shortly after the meeting in the park, on the evening of August 2, 2021, in Westbury, New York, alleged MS-13 member Galdamez Leon shot at a suspected Latin Kings member multiple times, and the victim sustained a gunshot wound to the ankle. 

Approximately one month later, on September 15, 2021, alleged MS-13 members Carlos Alvarado, Tylor Salmeron, and other individuals participated in the attempted murder of a different Latin Kings member who had provoked the MS-13 by posting on social media a mocking video of himself walking in Fulton territory in Westbury.  Alvarado and another individual shot the victim in the face.

Drug Distribution and Money Laundering

Edenilson Velasquez Larin, Christian Alas Leon, Carlos Alvarado, Jose Arevalo Iraheta, Jose Espinoza Sanchez, Erick Galdamez Leon, Jose Guevara Aguilar, Oscar Hernandez Baires, Jose Mejia Hernandez, Tylor Salmeron and Erick Zavala Hernandez are also charged with selling cocaine and marijuana to earn money for MS-13.  In addition, Velasquez Larin, Alas Leon, Alvarado, Espinoza Sanchez, Galdamez Leon, Blanca Garcia, Hernandez Baires, Keila Hernandez May, Mejia Hernandez and Zavala Hernandez are charged with money laundering in connection with the flow of tens of thousands of dollars from alleged MS-13 members to MS-13 leader Velasquez Larin.

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

This case was investigated as part of the ongoing efforts by the OCDETF, a partnership that brings together the combined expertise of 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.

Today’s charges are the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2009, this Office has obtained indictments charging MS-13 members with carrying out more than 65 murders in the district and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by our law enforcement partners.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Jonathan Siegel, Michael W. Gibaldi, and Anna Karamigios are in charge of the prosecution, with the assistance of Paralegal Specialist Emily Moosher.

New Defendants:

Edenilson Velasquez Larin (also known as “Agresor,” “Saturno,” and “Paco”)
Age: 33
Thornton, Colorado

Christian Alas Leon (also known as “Pata de Chucho”)
Age: 24
Westbury, New York

Carlos Alvarado (also known as “Brayle” and “Danny”)
Age: 19
Westbury, New York

Jose Arevalo Iraheta (also known as “Splinter” and “Daniel”)
Age: 26 
Queens, New York

Erick Galdamez Leon (also known as “Truco,” “Burro,” and “Chicle”)
Age: 23
Westbury, New York

Blanca Garcia (also known as “Lisbeth”)
Age: 31
Thornton, Colorado

Jose Guevara Aguilar (also known as “Tranquilo,” “Malhechor,” and “Angel”)
Age: 24
Queens, New York

Oscar Hernandez Baires (also known as “Pinky,” “Duende,” “Roco,” and “Renuente”)
Age: 23
Trenton, New Jersey

Keila Hernandez May
Age: 35
Carrboro, North Carolina

Yonathan Hernandez
Age: 24
Hempstead, New York

Leyla Carranza
Age: 22
Richmond, Virginia

Jose Mejia Hernandez (also known as “Mismo” and “Timbre”)
Age: 21
Westbury, New York

Jose Espinoza Sanchez (also known as “Cable,” “Bleca,” “Clave,” and “Victor”)
Age: 24
Carrboro, North Carolina

Tylor Salmeron (also known as “El Duende”)
Age: 20
Westbury, New York

Erick Zavala Hernandez (also known as “Berry,” “Berro,” and “Alex”)
Age: 26
Queens, New York

Defendants Previously Indicted:

Juan Amaya-Ramirez (also known as “Cadaver”)
Age: 25
Fresh Meadows, New York

Oscar Flores-Mejia (also known as “Chamuco”)
Age: 23 
Elmhurst, New York

Ramiro Gutierrez (also known as “Cara de Malo”)
Age: 30
Flushing, New York

Victor Lopez (also known as “Curioso”)
Age: 24
Flushing, New York

Tito Martinez-Alvarenga (also known as “Imprudente”)
Age: 23
Flushing, New York

Emerson Martinez-Lara (also known as “Fugitivo” and “Adonay”)
Age: 24
College Point, New York

Ismael Santos-Novoa (also known as “Profe” and “Travieso”)
Age: 35
Flushing, New York

E.D.N.Y. Docket No. 20-CR-228 (S-2) (LDH)

Earlier today, in federal court in Brooklyn, Roman Nikoghosyan was sentenced by United States District Judge Dora L. Irizarry to 8 years’ imprisonment for the extortion and the extortion conspiracy of two separate individuals and possessing a firearm as a convicted felon.  Nikoghosyan was arrested in Los Angeles, California, in July 2021, and pleaded guilty to the charges in September 2022.

Breon Peace, United States Attorney for the Eastern District of New York, announced the sentence.

“Nikoghosyan is a prolific extortionist who learned the consequences today of preying on the Eurasian community in Brooklyn,” stated United States Attorney Peace.  “His prosecution serves as an example of the priority this Office has placed on protecting vulnerable members of the district from lawless, violent individuals.”

Mr. Peace thanked the Federal Bureau of Investigation, New York Field Office, and the New York City Police Department for their outstanding investigative work on the case.

As set forth in court filings, Nikoghosyan, is a high-ranking member of a violent, Brooklyn-based Eurasian organized crime syndicate—KavKaz Nation (“KavKaz”)—that operated primarily in the Manhattan Beach and Brighton Beach neighborhoods in Brooklyn, New York.  Members of KavKaz, including Nikoghosyan, referred to their membership as the “KWAY” or “K WAY,” and wore jewelry or articles of clothing emblazoned with the word “KavKaz.”  Members of KavKaz drew on ties to the Caucus region of Eurasia, namely Armenia, Uzbekistan, parts of Southern Russia, and Azerbaijan, in furtherance of their criminal goals, including extortion.  

Relying on his reputation for violence and repeated threats of physical harm, Nikoghosyan extorted two individuals in 2021.  In February 2021, Nikoghosyan was operating a narcotics distribution scheme in which he employed the victim of one of his extortionate schemes to transport packages containing marijuana.  When the victim discovered the illicit content of the packages and refused to continue distributing the narcotics, Nikoghosyan, with the assistance of co-conspirators, demanded $10,000 in extortionate payments from the victim, threatening to stab him or break his legs if he did not comply.  In May 2021, Nikoghosyan extorted $5,000 from a second victim.  The defendant advised an associate that he “spoke with that son of a b----,” and that he warned the victim, “Do you not want to walk around Brooklyn anymore?” 

As detailed in court filings, during the course of the investigation, Nikoghosyan discussed assaulting victims with co-conspirators and threatening individuals with physical violence, including the use of weapons.  Additionally, in June 2021, Nikoghosyan engaged in multiple conversations related to the escape of a co-conspirator from a New York City Department of Corrections jail barge.  Nikoghosyan attempted to provide a vehicle for the co-conspirator to drive to California, along with approximately $2,000 for the co-conspirator to use while on the run.

Nikoghosyan, having been previously convicted of felony attempted robbery, also pleaded guilty to possessing a Hi-Point 995 rifle that was found during the execution of a search warrant at a stash house in Brooklyn that was operated by the defendant.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Matthew R. Galeotti and Dana Rehnquist are in charge of the prosecution. 

The Defendants:

ROMAN NIKOGHOSYAN (also known as “Roma”)
Age:  34
Brooklyn, New York

E.D.N.Y. Docket No. 21-CR-421 (DLI)

Earlier today, a federal jury in Brooklyn, New York, convicted three defendants on multiple counts of a superseding indictment charging them with acting and conspiring to act in the United States as illegal agents of the People’s Republic of China (PRC), without prior notification to the Attorney General. 

Michael McMahon, 55, of Mahwah, New Jersey, was convicted of acting as an illegal agent of the PRC, conspiracy to commit interstate stalking and interstate stalking; Congying Zheng, 27, of Brooklyn, was convicted of conspiracy to commit interstate stalking and interstate stalking; and Zhu Yong aka Jason Zhu, 66, of Queens, New York, was convicted of conspiracy to act as an illegal agent of the PRC, acting as an illegal agent of the PRC, conspiracy to commit interstate stalking and interstate stalking.

According to court documents and evidence presented at trial, McMahon – a retired NYPD sergeant working as a private investigator – and Zhu knowingly acted at the direction of the PRC government officials to conduct surveillance and engage in a campaign to harass, stalk and coerce certain residents of the United States to return to the PRC as part of a global and extralegal repatriation effort known as “Operation Fox Hunt.” Zheng engaged in interstate stalking of the same victims, leaving a threatening note at their residence. 

Today’s verdict follows a three-week trial before U.S. District Judge Pamela K. Chen. McMahon faces up to 20 years in prison, Zhu faces up to 25 years in prison, and Zheng faces up to 10 years in prison. A federal district court judge will determine any sentence after considering U.S. Sentencing Guidelines and other statutory factors.

“The defendants engaged in a campaign of harassment and coercion on behalf of the PRC to force the victim’s repatriation to China from the United States, including by threatening family members,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Department of Justice will hold accountable those who would help repressive regimes violate the fundamental freedoms of people in the United States.”

“The jury’s verdict confirms that defendants McMahon and Zhu knowingly acted at the direction of a hostile foreign state to harass, intimidate and attempt to cause the involuntary return of a resident of the New York metropolitan area to the People’s Republic of China, and that defendant Zheng harassed and intimidated that same person and his family,” said U.S. Attorney Breon Peace for the Eastern District of New York. “It is particularly troubling that defendant Michael McMahon, a former sergeant in the New York City Police Department, engaged in surveillance, harassment, and stalking on behalf of a foreign power for money. We will remain steadfast in exposing and undermining efforts by the Chinese government to reach across our border and perpetrate transnational repression schemes targeting victims in the United States in violation of our laws.”

“The conviction of these three defendants – including a retired NYPD sergeant – is yet another powerful reminder of the Chinese government’s ongoing, pervasive, and illegal behavior here in the United States,” said Assistant Director Suzanne Turner of the FBI’s Counterintelligence Division. “At the direction of the PRC’s Ministry of Public Security, the defendants engaged in increasingly egregious efforts at repression, from stalking to outright threats and intimidation tactics undertaken at the victim’s family home. This will not be tolerated within our borders, plain and simple. If you or someone you know have been targeted in this manner, we urge you to contact the FBI – and to all those engaging in such repression tactics, stand forewarned.”

As proven at trial, between approximately 2016 and 2019, the defendants participated in an international campaign with members of the PRC government as part of “Operation Fox Hunt” to threaten, harass, surveil and intimidate John Doe #1 and his family, in order to force John Doe #1 and his wife, Jane Doe #1, to return to the PRC. In or around 2015, the PRC government caused the International Criminal Police Organization (Interpol), an inter-governmental law enforcement organization, to issue “Red Notices” for John Doe #1 and Jane Doe #1, alleging that both persons were wanted by the PRC government on corruption-related charges.

Zhu hired McMahon who obtained detailed information about John Doe #1, his wife, and his daughter from a law enforcement database and other government databases, then reported back to Zhu and others, including a PRC police officer, what he had learned. McMahon also conducted surveillance outside the New Jersey home of John Doe #1’s sister-in-law and provided Zhu and PRC officials with detailed reports of what he had observed. The operation was supervised and directed by several PRC officials, including co-conspirators Hu Ji, a PRC police officer with the Wuhan Public Security Bureau and Tu Lan, a PRC prosecutor with the Wuhan Procuratorate.

In April 2017, Tu Lan and Hu Ji transported John Doe #1’s then-82-year-old father from the PRC to the New Jersey home of John Doe #1’s sister-in-law to attempt to convince John Doe #1 to return to the PRC. The testimony established that John Doe #1’s father was brought by a PRC doctor and charged co-conspirator, Li Minjun, and that while John Doe #1’s father was in the United States, his daughter was threatened with jailing in the PRC. A co-conspirator conducted surveillance of the home during the visit, wearing night-vision goggles provided by the PRC doctor and the PRC prosecutor. McMahon tailed John Doe #1 from the meeting with his elderly father, back to his home, and provided John Doe #1’s address – which was previously unknown – to the PRC operatives.

In October 2016 and April 2017, McMahon emailed himself a China Daily News article titled “Interpol Launches Global Dragnet for 100 Chinese Fugitives,” which stated, “Amid the nation’s intensifying antigraft campaign, arrest warrants were issued by Interpol China for former State employees and others suspected of a wide range of corrupt practices. China Daily was authorized by the Chinese justice authorities to publish the information below.” The article provided a list of photographs and identifying information about Operation Fox Hunt targets by the PRC government, including those of John Doe #1 and Jane Doe #1.

On Sept. 4, 2018, Zheng drove to the New Jersey residence of John Doe #1 and Jane Doe #1 and pounded on the front door. He and a co-conspirator attempted to force open the door to the residence, then left a note that stated “If you are willing to go back to the mainland and spend 10 years in prison, your wife and children will be all right. That’s the end of this matter!” 

Previously, three other defendants pleaded guilty in connection with their roles in the PRC-directed harassment and intimidation campaign.

Zebin pleaded guilty in March 2022 to interstate stalking conspiracy and is awaiting sentencing. Hongru Jin pleaded guilty in June 2021 to conspiring to act as an illegal agent of the PRC and interstate stalking conspiracy and is awaiting sentencing. Tu Lan, Hu Ji and Li Minjun are fugitives.

The FBI Newark Field Office investigated the case with valuable assistance provided by the State Department’s Diplomatic Security Service.

Assistant U.S. Attorneys Craig R. Heeren, Meredith A. Arfa and Irisa Chen for the Eastern District of New York and Trial Attorney Christine A. Bonomo of the National Security Division’s Counterintelligence and Export Control Section are in charge of the prosecution, with valuable assistance provided by Paralegal Specialist Mary Clare McMahon.  

Earlier today, a federal jury in Brooklyn returned guilty verdicts against three defendants on multiple counts of a superseding indictment charging them with acting and conspiring to act in the United States as illegal agents of the People’s Republic of China (PRC) without prior notification to the Attorney General.  Defendant Michael McMahon was convicted of acting as an illegal agent of the PRC, conspiracy to commit interstate stalking and interstate stalking.  Defendant Zhu Yong, also known as “Jason Zhu”, was convicted of conspiracy to act as an illegal agent of the PRC, acting as an illegal agent of the PRC, conspiracy to commit interstate stalking and interstate stalking.  Defendant Zheng Congying was convicted of conspiracy to commit interstate stalking and interstate stalking.  Defendants McMahon and Zhu knowingly acted at the direction of PRC government officials to conduct surveillance and engage in a campaign to harass, stalk, and coerce certain residents of the United States to return to the PRC as part of a global and extralegal repatriation effort known as “Operation Fox Hunt.”  Defendant Zheng engaged in interstate stalking of the same victims, leaving a threatening note at their residence.  Today’s verdict followed a three-week trial before United States District Judge Pamela K. Chen.  When sentenced, McMahon faces up to 20 years in prison, Zhu faces up to 25 years in prison, and Zheng faces up to 10 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, Matthew G. Olsen, Assistant Attorney General of the Justice Department’s National Security Division, James E. Dennehy, Special Agent-in-Charge, Federal Bureau of Investigation, New Jersey Field Office (FBI), and Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), announced the verdict.

“The jury’s verdict confirms that defendants McMahon and Zhu knowingly acted at the direction of a hostile foreign state to harass, intimidate and attempt to cause the involuntary return of a resident of the New York metropolitan area to the People’s Republic of China, and that defendant Zheng harassed and intimidated that same person and his family,” stated United States Attorney Peace.  “It is particularly troubling that defendant Michael McMahon, a former sergeant in the New York City Police Department, engaged in surveillance, harassment, and stalking on behalf of a foreign power for money.  We will remain steadfast in exposing and undermining efforts by the Chinese government to reach across our border and perpetrate transnational repression schemes targeting victims in the United States in violation of our laws.” 

Mr. Peace expressed his thanks to the Department of State’s Diplomatic Security Service, and the FBI’s New York Field Office for their valuable assistance with the investigation.

“The defendants engaged in a campaign of harassment and coercion on behalf of the PRC to force the victim’s repatriation to China from the United States, including by threatening family members,” stated Assistant Attorney General Olsen.  “The Department of Justice will hold accountable those who would help repressive regimes violate the fundamental freedoms of people in the U.S.”

FBI Special Agent-in-Charge Dennehy stated:  “We hope this verdict serves as a message to other operatives in the United States working right now at the behest of the People’s Republic of China in its effort to silence those who speak out against it. The FBI and our law enforcement partners are watching, and we are taking action to stop the stalking, threatening, and repressing of dissidents. A specific takeaway, private investigators will face consequences if they wittingly ignore the warning signs that they may be part of a larger plot to illegally harass and coerce people by a foreign power. If you have concerns, reach out to us.”

“Today’s verdict reinforces HSI’s commitment to aggressively combat any illegal intrusions by the Chinese government to target, threaten, harass, surveil, coerce and intimidate legal residents of the United States,” stated HSI New York Special Agent-in-Charge Arvelo.  “Rather than engaging proper officials through lawful diplomatic channels, PRC officials and intermediaries acting on their behalf have engaged in illegal conduct in the United States to carry out their goals. HSI will leverage all of its law enforcement partnerships and utilize all investigative tools to disrupt attempts by international actors to circumvent our laws, undermine our national security, and target U.S. residents.”

As proven at trial, between approximately 2016 and 2019, the defendants participated in an international campaign with members of the PRC government as part of “Operation Fox Hunt” to threaten, harass, surveil, and intimidate John Doe #1 and his family, to force John Doe #1 and his wife, Jane Doe #1, to return to the PRC.  In or around 2015, the PRC government caused the International Criminal Police Organization (also known as “Interpol”), an inter-governmental law enforcement organization, to issue “Red Notices” for John Doe #1 and Jane Doe #1 alleging that both persons were wanted by the PRC government on corruption-related charges.

Zhu hired McMahon, a retired NYPD sergeant working as a private investigator, who obtained detailed information about John Doe #1, his wife, and his daughter from a law enforcement database and other government databases, then reported back to Zhu and others, including a PRC police officer, what he had learned.  McMahon also conducted surveillance outside the New Jersey home of John Doe #1’s sister-in-law and provided Zhu and PRC officials with detailed reports of what he had observed.  The operation was supervised and directed by several PRC officials, including co-conspirators Hu Ji, a PRC police officer with the Wuhan Public Security Bureau, and Tu Lan, a PRC prosecutor with the Wuhan Procuratorate.

In April 2017, Tu Lan and Hu Ji transported John Doe #1’s then-82-year-old father from the PRC to the New Jersey home of John Doe #1’s sister-in-law to attempt to convince John Doe #1 to return to the PRC.  The testimony established that John Doe #1’s father was brought by a PRC doctor and charged co-conspirator, Li Minjun, and that while John Doe #1’s father was in the United States, his daughter was threatened with jailing in the PRC.  A co-conspirator conducted surveillance of the home during the visit, wearing night-vision goggles provided by the PRC doctor and PRC prosecutor.  McMahon tailed John Doe #1 from the meeting with his elderly father, back to his home, and provided John Doe #1’s address—which was previously unknown—to the PRC operatives.

In October 2016 and April 2017, McMahon emailed himself a China Daily News article titled “Interpol Launches Global Dragnet for 100 Chinese Fugitives,” which stated, “Amid the nation’s intensifying antigraft campaign, arrest warrants were issued by Interpol China for former State employees and others suspected of a wide range of corrupt practices.  China Daily was authorized by the Chinese justice authorities to publish the information below.”  The article provided a list of photographs and identifying information about Operation Fox Hunt targets by the PRC government, including those of John Doe #1 and Jane Doe #1.

On September 4, 2018, Zheng drove to the New Jersey residence of John Doe #1 and Jane Doe #1 and pounded on the front door.  He and a coconspirator attempted to force open the door to the residence, then left a note that stated “If you are willing to go back to the mainland and spend 10 years in prison, your wife and children will be all right.  That’s the end of this matter!” 

Previously, three other defendants pled guilty in connection with their roles in the PRC-directed harassment and intimidation campaign.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Craig R. Heeren, Meredith A. Arfa, and Irisa Chen are in charge of the prosecution, with assistance from Trial Attorney Christine A. Bonomo of the Justice Department’s National Security Division, and Paralegal Specialist Mary Clare McMahon.   

The Defendants:

MICHAEL MCMAHON
Age:  55
Mahwah, New Jersey

ZHU YONG (also known as “Jason Zhu”)
Age:  66
Queens, New York

ZHENG CONGYING
Age:  27
Brooklyn, New York

E.D.N.Y. Docket No. 21-CR-265 (S-1) (PKC)

Breon Peace, United States Attorney for the Eastern District of New York and Lisa Garcia, Regional Administrator, U.S. Environmental Protection Agency (EPA) Region 2, announced today that the United States filed suit under the Safe Drinking Water Act (SDWA), against Suffolk County, the Suffolk County Department of Parks and Recreation and the Suffolk County Department of Public Works  for their longstanding violations of the Underground Injection Well regulations which required Suffolk to close all Large Capacity Cesspools (LCCs) by April 2005 and all Motor Vehicle Waste Disposal Wells (MVWDWs) by January 1, 2008 (Prohibited LCCs and MVWDWs).  A Consent Judgment requiring Suffolk County to close all Prohibited LCCs and MVWDWs at an estimated cost of $7,020,000 and pay a $200,000 civil penalty was also lodged with the Court.

“Today’s Consent Judgment will protect the residents of Suffolk County and Long Island’s drinking water from harmful nutrient pollution which poses a risk both to the public health and the natural environment,” said United States Attorney Peace.  “This office will continue to vigorously enforce violations of the Safe Drinking Water Act to protect the public from contamination of its water supply and promote environmental justice.”

“This agreement with Suffolk County is a major achievement that will help protect the drinking water of millions of Long Islanders from the harmful impacts of large capacity cesspools and waste disposal wells," said Regional Administrator Lisa F. Garcia. "These types of underground injection wells can pollute groundwater and endanger public health and the environment. EPA is committed to enforcing the Safe Drinking Water Act to ensure that all communities have access to clean water.”

Background

The complaint alleges that the Defendants violated the SDWA in their continued ownership and operation of Prohibited LCCs and MVWDWs at various Suffolk County parks and facilities for years beyond the SDWA regulatory deadline by which they were required to close them. 

LCCs are cesspools that receive untreated sanitary waste, including human excreta, which have an open bottom or perforated sides, and have the capacity to serve 20 or more persons a day.  Such untreated waste is high in harmful nutrients, such as nitrogen, that can compromise ground and surface water quality.  Nutrient pollution of the ground and surface waters in and surrounding Suffolk County is a longstanding problem that threatens the area’s water quality and ecosystem.  

MVWDWs are disposal wells that receive fluids from motor vehicle repair or maintenance activities.  During normal activities, vehicle fluids—such as engine oil, transmission fluid and antifreeze—when released to a dry well or septic system, can introduce various toxic chemicals into sources of drinking water.

Congress enacted the SDWA to protect the nation’s drinking water sources, including the regulation of LCCs and MVWDWs to prevent them from contaminating underground sources of drinking water. Underground injection wells, including the LCCs and MVWDWs at issue in the Complaint, pose a risk to the public because they can contaminate underground drinking water sources and the public water systems that use those sources.  

Consent Judgment

All of the Prohibited LCCs and MVWDWs are above the Nassau/Suffolk County Sole Source Aquifer, an already stressed sole source aquifer that supplies drinking water to the entire population of Suffolk County and most of the population of Long Island.  Because discharges from LCCs and MVWDWs have the potential to discharge to groundwater, through which contamination may migrate, such discharges impact all communities receiving drinking water from the Sole Source Aquifier, including communities that have been historically exposed to disproportionate environmental burdens.

Under the Consent Judgment, Defendants will close all the Prohibited LCCs and MVWDWs, convert them to lawful uses and prevent further contamination.  LCCs associated with most buildings will be converted to Innovative Alternative Solutions (IASs), with significant environmental benefits, particularly in the area of nitrogen reduction to nutrient compromised waters and protection of groundwater on Long Island.  IASs significantly decrease nitrogen discharges from wastewater.  The estimated cost of these measures and the closing of all Prohibited LCCs and MVWDWs is $7,020,000.  Defendants have already implemented certain measures to achieve compliance with the SDWA, including closing one of the Prohibited MVWDWs.  The remainder of the MVWDWs will be closed within 30 days of entry of the Consent Judgment.  The LCCs will be closed and converted in a phased schedule.  The Consent Judgment also requires Defendants to pay a $200,000 civil penalty.

The proposed settlement which is subject to a 30-day public comment period is available here: https://justice.gov/enrd/consent-decrees.

Assistant United States Attorney Deborah B. Zwany is in charge of the litigation, with assistance from Phyllis Kaplan Feinmark and Lauren Fischer, Regional Counsel's Office, EPA Region 2;  Doughlas McKenna, Chief of the Water Compliance Branch, EPA Region 2; Nicole Foley Kraft, Chief of the Ground Water Compliance Section, EPA Region 2; and Lisa Kim Pelcyger, Environmental Engineer, Water Compliance Branch, EPA.

E.D.N.Y. Docket No. 23-CV-4369

Earlier today, at the federal courthouse in Central Islip, Arthur Cornwall, a signal maintainer with the New York City Transit Authority, and Sean Williams, a New York State Court Officer, pleaded guilty to conspiring to commit wire fraud in connection with their receipt of approximately $770,000 in small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP). Today’s proceeding was held before United States Magistrate Judge Steven I. Locke.  When sentenced, Cornwall and Williams each face up to 30 years in prison, as well as restitution totaling more than $770,000 and a fine of up to $1.5 million.

Breon Peace, United States Attorney for the Eastern District of New York and Daniel Brubaker, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the guilty pleas.

“The abuse of disaster relief programs is a serious crime, and it is reprehensible that two civil servants would blatantly steal from these programs for small businesses and families struggling during the pandemic,” stated United States Attorney Peace.  “The defendants are being held accountable.  This case should serve as a reminder that while the worst days of the pandemic are in the past, law enforcement has a long memory for those who defrauded those relief programs.”

Inspector in Charge of the New York Division Daniel B. Brubaker said: “The government response to the COVID-19 Pandemic was unprecedented in its scope to help those who desperately needed government assistance in an extraordinary time in our nation’s history. These civil servants schemed and defrauded the public, in violation of their sworn oaths, by stealing money that should have gone to support our communities and not to fund their lifestyles. Postal Inspectors and our partners in the U.S. Attorney’s Office are committed to vigorously investigating and pursuing such offenders in order to maintain the integrity of and public confidence in disaster relief programs. Today’s guilty pleas are the result of this commitment.”

As set forth in court filings, between May 2020 and July 2020, amid the COVID-19 pandemic, Cornwall and Williams fraudulently applied for, and received, at least six PPP and EIDLP loans, totaling approximately $770,000, on behalf of purported corporate entities they controlled.  As part of the scheme designed to mislead the SBA and a financial institution disbursing the funds, the supporting documentation submitted by the defendants contained false information, including the identity of the individual applying for the loan, the number of employees, revenue, payroll costs, and the intended use of the loan proceeds. Instead of using the funds for disaster relief, Cornwall and Williams diverted them for their personal use, including the discharge of personal credit card debt and the purchase of cryptocurrency. 

Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Enacted on March 29, 2020, the CARES Act provided emergency financial assistance in connection with economic effects of the COVID-19 pandemic.  One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities.  The PPP provided for forgiveness of the loan if the recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.

Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters.  Under the program, EIDLP recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL (EIDL Advance).  The amount of an EIDL Advance was determined based on the number of employees working for the applicant.  The EIDL Advance did not have to be repaid.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Bradley T. King is in charge of the prosecution.

The Defendants:

ARTHUR CORNWALL
Age:  42
West Babylon, New York

SEAN WILLIAMS
Age:  41
Valley Stream, New York

E.D.N.Y. Docket No. 23-CR-238 (JMA)

Earlier today, at the federal courthouse in Brooklyn, social worker Enock Mensah was sentenced by United States District Judge Ann M. Donnelly to 42 months’ imprisonment for health care fraud and theft of federal funds after a jury found him guilty of defrauding the New York State Early Intervention Program (EIP), a public program designed to provide remedial services to developmentally delayed children.  Mensah was also ordered to pay over $177,000 in restitution.  Mensah was convicted in December 2019 following a one-week trial.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), and Jocelyn E. Strauber, Commissioner, New York City Department of Investigation (DOI), announced the sentence.

“Mensah shamefully enriched himself at the expense of the children who the Early Intervention Program is meant to benefit,” stated United States Attorney Peace.  “With today’s sentence, the defendant paid the price for abusing the trust placed in him as a social worker for vulnerable families.  This case should deter others who would attempt to defraud public benefit programs.”

“With today's sentence, Mr. Mensah will face the consequences of taking advantage of a program designed to assist those in need of specialized care.  For all those willing to exploit the public benefit system for their own self interest, let this case serve as a warning.  The FBI and our partners are committed to eradicating abuse and fraud in these systems,” stated FBI Assistant Director-in-Charge Driscoll.

“This defendant’s reprehensible scheme deprived children with special needs of assistance they required and deserved; today he faces the serious consequences of his illegal conduct,” stated DOI Commissioner Strauber.  “DOI is proud to work with the U.S. Attorney's Office for the Eastern District of New York and the FBI to protect the public funds that support critical services for New York’s children and families.”

Between August 2013 and October 2018, Mensah fraudulently billed Medicaid and EIP for more than 1,700 therapy sessions that never occurred, resulting in the theft of more than $145,000 in Medicaid funds and more than $29,000 in New York City Department of Health and Mental Hygiene funds.  At the trial, several parents of special needs children testified that Mensah did not provide therapy sessions to which their families were entitled under the program, despite documents showing that Mensah claimed to have done so and submitted claims forms for payment to the health care agencies.  One parent testified that she was in the Dominican Republic with her autistic child when Mensah billed for two purported therapy sessions with them.  Mensah fabricated more than one thousand session notes in order to receive payment for work he had not done.  In some cases, he forged the parents’ signatures on these claims forms; in others, he persuaded them to sign blank forms, which he later filled with falsified information and used to justify payment.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Ryan Harris, Anthony Bagnuola, and Oren Gleich are in charge of the prosecution with assistance of Paralegal Specialist Melissa Bennett.

The Defendant:

ENOCK MENSAH
Age:   62
Franklin Park, New Jersey

E.D.N.Y. Docket No. 19-CR-60 (S-1) (AMD)

Earlier today, at the federal courthouse in Brooklyn, United States District Judge Hector Gonzalez sentenced Bushawn Shelton to 37 years’ imprisonment for his leadership role in the October 4, 2018 killing of 71-year-old Sylvester Zottola and the July 11, 2018 attempted murder of Salvatore Zottola.  The defendant pleaded guilty to murder-for-hire and murder-for-hire conspiracy on August 22, 2022.

Co-defendants Anthony Zottola and Himen Ross were sentenced to life imprisonment following their convictions at trial.  Co-defendants Herman Blanco, Arthur Codner, Jason Cummings, and Branden Peterson previously pleaded guilty and were sentenced to lengthy terms of imprisonment that ranged from 16 to 22 years.

Breon Peace, United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“For more than a year, the defendant led the charge in stalking, beating, stabbing, and eventually shooting an elderly man purely for money,” stated United States Attorney Peace.  “The lengthy sentence meted out brings an end to the brutality of this violent group. The community is safer as a result.”

As proven at the trial of Shelton’s co-conspirators, Anthony Zottola, Sr., hired Bushawn Shelton to kill Zottola’s father, Sylvester, and his brother, Salvatore.  Shelton recruited numerous others to commit the murders, and together they engaged in a year-long conspiracy to carry out a series of violent attacks against Sylvester and Salvatore Zottola.  Among other attempts, on November 26, 2017, Sylvester Zottola was menaced at gunpoint by a masked individual.  On December 27, 2017, three men invaded Sylvester Zottola’s residence, struck him on the head with a gun, stabbed him multiple times, and slashed his throat.  Zottola survived the attack.  On July 11, 2018, a gunman shot Salvatore Zottola in the head, chest, and hand in front of his residence.  Zottola survived the shooting.

Shelton arranged for the placement of a tracking device on Sylvester Zottola’s car, allowing co-defendant Himen Ross, a fellow Bloods gang member, to track Sylvester Zottola to a McDonald’s restaurant on Webster Avenue. There, while Zottola waited at the drive-through to pick up a cup of coffee, Ross fatally shot him multiple times.  Ross and Shelton exchanged texts immediately after the hit, and then Shelton and Anthony Zottola exchanged texts, in which Anthony was informed that his father had just been murdered.   Shelton texted Anthony Zottola: “Can we party today or tomorrow?”  Anthony Zottola assured Shelton that he would have Shelton’s payment for carrying out the murder ready soon: “I have the cases of water in a day or so.”  A photograph later recovered from one of Shelton’s cellular telephones depicts a cardboard box of bottled water, as well as over $200,000 in banded currency. 

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Kayla C. Bensing, Emily J. Dean, Devon Lash, and Andrew M. Roddin are in charge of the prosecution, with the assistance of paralegal specialist Brittany Wissel.  Assistant United States Attorney Brian Morris assisted with forfeiture matters.

The Defendant:

BUSHAWN SHELTON (also known as “Shellz”)
Age:  39
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-609 (S-3) (HG)

An indictment was unsealed this morning in federal court in Brooklyn charging Nicole Daedone, founder and former Chief Executive Officer, and Rachel Cherwitz, former Head of Sales, of OneTaste, Inc. (OneTaste), a wellness education company founded in San Francisco, California.  Daedone and Cherwitz are both charged with forced labor conspiracy in connection with a years-long scheme to obtain the labor and services of a group of OneTaste members—including volunteers, contractors, and employees of OneTaste—by subjecting them to economic, sexual, emotional and psychological abuse, surveillance, indoctrination, and intimidation.

Cherwitz was arrested this morning and is expected to appear in the U.S. District Court for the Northern District of California this afternoon.  Cherwitz will be arraigned in the Eastern District of New York at a later date.  Daedone remains at large.

Breon Peace, United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.

“Under the guise of empowerment and wellness, the defendants are alleged to have sought complete control over their employees’ lives, including by driving them into debt and directing them to perform sexual acts while also withholding wages,” said U.S. Attorney Peace. “This prosecution should serve as a reminder to both employer and employee that no matter the marketing mantra, this conduct is never acceptable.”

“The defendants advertised their company as being able to help individuals recover from past trauma.  In reality, they allegedly targeted their victims in order to manipulate them not only into debt but to limit their independence and create a reliance on OneTaste for basic needs.  The FBI will continue to ensure that anyone willing to engage in a forced labor schemes are held accountable in the criminal justice system,” stated FBI Assistant Director-in-Charge Driscoll.

OneTaste

As alleged in the indictment and court documents, OneTaste branded itself as a sexuality-focused wellness education company founded by Nicole Daedone in 2004.    From approximately 2004 through 2018, OneTaste generated revenue by providing courses, coaching and events related to so-called wellness practices, in exchange for a fee.  Many OneTaste members lived in residential warehouses where they participated in courses and experimented sexually.

At various points in time, OneTaste maintained operations in, among other locations, New York City, San Francisco, Denver, Las Vegas, Boulder, Los Angeles, Austin and London.  In New York City, OneTaste leased residences and hosted events in several different locations, including in Brooklyn, Harlem, Hells Kitchen, Soho and West Village neighborhoods. 

Daedone served as the Chief Executive Officer and a leader of OneTaste from the company’s founding until approximately 2017.  Rachel Cherwitz served as OneTaste’s Head of Sales from approximately 2009 through 2018.

The Scheme

As alleged in the indictment, between approximately 2004 and 2018, Daedone and Cherwitz deployed a series of abusive and manipulative tactics in order to obtain the labor and services of a group of OneTaste members who were volunteers, contractors, and employees of OneTaste.  Daedone and Cherwitz intentionally targeted for recruitment to OneTaste individuals who had suffered prior trauma and advertised that OneTaste’s courses and teachings could heal past sexual trauma and dysfunction.  If the members could not afford OneTaste’s courses—which ranged from hundreds to tens of thousands of dollars each—Daedone and Cherwitz induced the OneTaste members to incur debt, and at times directly assisted the OneTaste members in opening new credit cards, to pay for them. 

Daedone and Cherwitz also undertook tactics designed to render the OneTaste members dependent on OneTaste for their shelter and basic necessities, and to limit the OneTaste members’ independence and control.  Among other things, they subjected the OneTaste members to constant surveillance in communal homes and collected deeply sensitive and personal information about them which the defendants then used to render the OneTaste members emotionally, socially and psychologically dependent on OneTaste.  They isolated the OneTaste members from their support networks by breaking up established relationships and assigning them to move to new locations on short notice.  While employing such tactics, Daedone and Cherwitz demanded absolute commitment to Daedone, including by exalting Daedone’s teachings and ideology.  As part of this ideology, Daedone and Cherwitz instructed the OneTaste members to engage in sexual acts—including acts the members found uncomfortable or repulsive— as a requirement to supposedly obtain freedom and enlightenment and demonstrate their commitment to OneTaste and Daedone.

Upon securing the allegiance of the OneTaste members through these tactics, Daedone and Cherwitz engaged in abusive employment practices.  For example, Daedone, Cherwitz and other OneTaste leaders promised to pay the OneTaste members wages and commissions for work performed on behalf of OneTaste and subsequently failed to pay the OneTaste members the amounts owed, or changed the OneTaste members’ employment statuses or locations without advance notice.  Daedone and Cherwitz also recruited and groomed OneTaste members to engage in sexual acts with OneTaste’s current and prospective investors, clients, employees and beneficiaries, for the financial benefit of OneTaste and, in turn, themselves. 

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, Daedone and Cherwitz each face a maximum sentence of 20 years’ imprisonment.   

If you believe you are or may be a victim in this case, please call the FBI New York’s main line at 212-384-5000. 

The government’s case is being handled by the Office’s Civil Rights Section.  Assistant United States Attorneys Lauren H. Elbert, Gillian Kassner, Devon Lash and Jonathan Siegel are in charge of the prosecution, with assistance from Paralegal Specialist Anna November.

The Defendants:

NICOLE DAEDONE
Age:  56
San Diego, California

RACHEL CHERWITZ
Age:  43
Philo, California

E.D.N.Y. Docket No. 23-CR-146 (DG)

Breon Peace, United States Attorney for the Eastern District of New York, announced today that the City of New York has agreed to remediate radioactive materials on New York City-owned property located near the former Wolff-Alport Chemical Company facility, and to pay the United States $1.6 million for costs incurred by the U.S. Environmental Protection Agency (EPA).  Under a proposed Consent Judgment filed with the Court today, the City of New York will fund and perform remedial work on City property. 

“This action protects New York City residents and communities from exposure to hazardous substances including radioactive waste at the Wolff-Alport Site,” stated United States Attorney Peace.  “This settlement demonstrates that this Office and our Environmental Justice Team are committed to addressing environmental concerns, including the removal of hazardous substances from communities that have been disproportionally burdened by environmental health hazards.”

"EPA has collaborated extensively with local, state and federal partners to address risks posed by this Superfund site since our first actions in 2012. This agreement tackles the continued cleanup of radioactive pollution on the City-owned portion of the Wolff-Alport Chemical Company Superfund site and pays back EPA $1.6 million for its vital work to safeguard public health," said EPA Regional Administrator Lisa F. Garcia. "Today's settlement takes us one step closer to completing our cleanup of this site so that one day it will be restored land that is ready for reuse and economic activity."

Background

The Wolff-Alport Company operated at the facility on the Wolff-Alport Chemical Company Superfund Site (Wolff-Alport Site) from the 1920s until 1954.  The Wolff-Alport Chemical Company Superfund Site (Wolff-Alport Site)  is located in Ridgewood, Queens, which borders Bushwick, Brooklyn.  The company’s operations included importing monazite sand that was processed to extract rare earth elements.  Residues from the processing of the monazite sands contained radioactive materials, including thorium and uranium, along with their decay products, such as radium.   These materials contain radionuclides, which are hazardous substances. 

The company disposed of these hazardous wastes in the New York City sewer system or buried them on the former facility.  Exposure to these radionuclides and their decay products either internally or externally can cause damage to deoxyribonucleic acid and body tissues, and can cause an increase in the risk of cancer over a lifetime. 

Consent Judgment

After conducting extensive assessments of the Wolff-Alport Site, EPA added it to the National Priorities List (NPL) in 2014 and issued a Record of Decision in 2017, which sets forth the site remediation plan.  Further information concerning the Wolff-Alport Site and the ongoing remediation can be found here.

The United States lodged a proposed Consent Judgment, which sets forth the terms of the settlement with the City of New York pursuant to the federal Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as the Superfund statute.  The agreement provides for the City to perform the cleanup of contamination at City owned property to protect human health and the environment,  reimbursement to EPA of $1.6 million of its relevant past response costs, and for the City of New York to make periodic payments for future EPA oversight costs related to the cleanup of property owned by the City of New York.  The Consent Judgment also includes a Statement of Work which sets forth the parameters of the City’s remedial work commitments.

The proposed Consent Judgment will remain lodged with the District Court for a period of at least 30 days, and notice of the Consent Judgment will be published in the Federal Register.  This will afford members of the public the opportunity to submit comments on the Consent Judgment to the Department of Justice prior to it seeking court approval of the settlement.

The United States Attorney’s Office for the Eastern District of New York vigorously enforces the nation’s environmental laws to address environmental, health, and climate impacts on individuals and communities within the district.  Any member of the public who wishes to notify the United States of environmental justice concerns may contact the Office’s Environmental Justice Team here.

The case was handled by Assistant United States Attorneys Ekta Dharia and Matthew Silverman from the United States Attorney’s Office for the Eastern District of New York, EPA Office of Regional Counsel Team Leader James Doyle, Assistant Regional Counsel Jean Regna, EPA New York Remediation Branch Section Chief Joel Singerman and Remedial Project Manager Thomas Mongelli.

E.D.N.Y. Docket No. 23-CV-476

Earlier today, at the federal courthouse in Central Islip, John Quadrino was sentenced by United States District Judge Joan M. Azrack to 41 months’ imprisonment and over $3.3 million restitution for directing a Ponzi scheme utilizing Princess Cut Industries, Inc., Sassy Jewelry Buyers, Inc. and Golden Glitter Trading, Inc. (collectively referred to as the “Gold Purchasing Companies”). Quadrino told investors that their money would be invested in the sale of gold, jewelry and diamonds, via the Gold Purchasing Companies. In reality, Quadrino never invested their money. In April 2018, Quadrino pleaded guilty to one count of conspiring to commit wire fraud.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Anne T. Donnelly, Nassau County District Attorney, announced the sentence.

“The defendant blatantly stole the money of hard-working men and women in our community for the sole purpose of enriching himself until his Ponzi scheme collapsed under the weight of his lies,” stated United States Attorney Peace. “Today’s prison sentence punishes the defendant for the financial ruin he has inflicted on investors who had trusted him.”

“Dozens of investors handed over their savings to this defendant based on empty promises, and in the end, he personally spent and gambled away millions of dollars of their hard-earned money,” stated District Attorney Donnelly. “I commend our law enforcement partners at the FBI and U.S. Attorney’s Office for their work securing today’s prison sentence, and ensuring this defendant cannot further victimize anyone else.”

Quadrino represented to potential investors that the Gold Purchasing Companies were involved in the sale of gold, jewelry and diamonds to refineries and jewelers. He asked investors to invest large sums of money, for fixed periods of time, in exchange for a guaranteed, fixed rate of return at the end of the agreed upon time period. Quadrino never actually purchased gold, jewelry or diamonds in any significant quantities. Instead, Quadrino systematically engaged in a classic Ponzi scheme, over the course of five years, returning investor principal and interest from the investor capital of other victims. As a result, investors invested approximately $13.1 million with the Gold Purchasing Companies and suffered total losses of approximately $3.3 million. The defendant used investor capital to issue checks to himself and to pay for his personal gambling expenses.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Mark E. Misorek is in charge of the investigation with assistance provided by Special Assistant United States Attorney Matthew Sotirhos of the Nassau County District Attorney’s Office.

The Defendant: JOHN QUADRINO
Age: 57
Oceanside, New York

E.D.N.Y. Docket No. 17-CR-153 (JMA)

Earlier today, in federal court in Central Islip, Frank Parasmo, a former medical doctor, was sentenced by United States District Judge Joan M. Azrack to 36 months in prison for his conviction on 32 counts of unlawfully distributing oxycodone, a highly addictive prescription painkiller, to 18 patients without a legitimate medical purpose. As part of the sentence, Parasmo also received 3 years of supervised release.

Breon Peace, United States Attorney for the Eastern District of New York, and Frank A. Tarentino III, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), announced the verdict.

“Today’s sentence demonstrates that there are significant consequences for doctors who act as drug dealers,” stated U.S. Attorney Peace. “This Office remains committed to using all tools available to address the damage the opioid crisis does to our communities.”

“DEA’s investigative and regulatory focus is to keep the public safe and healthy,” stated DEA Special Agent-in-Charge Tarentino.  “Parasmo’s actions were irresponsible to his patients and endangered theirs and others’ safety and well-being; his disregard of pertinent information such illicit drug use and the diversion of highly addictive opioid prescriptions was egregious.  I commend the DEA’s Long Island District Office-Tactical Diversion Squad and the Eastern District of New York U.S. Attorney’s Office for their tenacious work on this investigation.” 

As proven at trial, between January 2014 and February 2015, Parasmo provided prescriptions for oxycodone and hydrocodone pills to 18 of his patients without a legitimate medical purpose and outside the course of a professional medical practice. Parasmo issued prescriptions to patients who had just left detox treatment in rehabilitation facilities, as well as patients who had just been discharged from a hospital following an overdose. In addition, Parasmo issued prescriptions to many patients he knew were taking illegal drugs or who he suspected were addicts. There is a significant risk of an overdose when oxycodone is taken with heroin and cocaine.

In several instances, Parasmo continued to write prescriptions for individuals who he had been warned were not taking their pills as prescribed and, in some instances, possibly reselling them on the streets. From 2010 to 2015, Dr. Parasmo prescribed over 1.5 million oxycodone and hydrocodone pills, making him one of the top prescribers of those painkillers in New York State during that period. Notably, after learning that the DEA was investigating his prescribing practices, Parasmo cut in half the number of oxycodone prescriptions he issued annually.

This case was investigated by the DEA’s Long Island District Office Tactical Diversion Squad, comprising agents and officers of the DEA, Nassau County Police Department, Suffolk County Police Department, Port Washington Police Department, and Department of Health and Human Services-Office of Inspector General.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Michael Maffei and Charles P. Kelly are in charge of the prosecution.

The Defendant:

FRANK PARASMO
Age: 76
Deer Park, New York

E.D.N.Y. Docket No. 19-CR-1 (JMA)

Earlier today, at the federal courthouse in Central Islip, Donald Finley, a Locust Valley businessman and owner of the now-defunct Jekyll & Hyde theme restaurant in Manhattan and the Bayville Adventure Park on Long Island, pleaded guilty to disaster relief fraud and wire fraud in connection with his receipt of millions of dollars in small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP). Today’s proceeding was held before United States Magistrate Judge Arlene R. Lindsay.  When sentenced, Finley faces up to 30 years in prison, as well as restitution totaling more than $3.2 million and a fine of up to $1.25 million.

Breon Peace, United States Attorney for the Eastern District of New York, Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), and Daniel Brubaker, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the guilty plea.

“Finley has admitted diverting millions of dollars in COVID-19 disaster relief funds to finance his personal expenses, including the purchase of a home in Nantucket, Massachusetts,” stated United States Attorney Peace. “This Office will continue investigating and prosecuting those, like the defendant, who shamelessly steal from government programs that were intended for struggling small businesses and families during the pandemic.”

“We have seen the abuses of disaster relief programs when all too often criminals find an opportunity for exploitation.  In this case, Finley obtained millions in COVID-19 relief funds, only to use the ill-gotten cash for his own personal gain. While he may be the owner of an amusement park meant to bring joy, with his guilty plea and pending sentencing, Finley may be facing a future that he could find much less enjoyable,” stated IRS-CI Special Agent-in-Charge Fattorusso. 

“Mr. Finley took advantage of a program intended to be used to support small businesses as part of the CARES Act of 2020, when he devised a scheme to submit fraudulent information to the government to obtain millions in funds during the pandemic to fund his lavish lifestyle. Not only did he purchase a home on Nantucket, but he utilized those funds to pay for personal expenses. Postal Inspectors and their law enforcement partners are always on a mission to ensure those who truly need assistance get it, and those who scheme and break the law to receive funds which they are not entitled to, are brought to justice,” stated USPIS Inspector-in- Charge Brubaker.

As set forth in court filings, between March 2020 and March 2021, amid the COVID-19 pandemic, Finley fraudulently applied for, and received, at least 29 PPP and EIDLP loans totaling approximately $3.2 million, on behalf of corporate entities he controlled.  Instead of using the funds for disaster relief, Finley diverted them for personal use, including the purchase of a home in Nantucket, Massachusetts, in February 2021.

Congress created the PPP and EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.   Enacted on March 29, 2020, the CARES Act provided emergency financial assistance in connection with economic effects of the COVID-19 pandemic.  One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities.  The PPP provided for forgiveness of the loan if the recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.

Another source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters.  Under the program, EIDLP recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL (EIDL Advance).  The amount of an EIDL Advance was determined based on the number of employees working for the applicant.  The EIDL Advance did not have to be repaid.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Mark E. Misorek is in charge of the prosecution.

The Defendant:

DONALD FINLEY
Age:  61
Locust Valley, New York

E.D.N.Y. Docket No. 23-CR-181 (JMA)

Earlier today, in federal court in Central Islip, United States District Judge Joanna Seybert sentenced William Junior Maxwell II, who is the rap artist known as “Fetty Wap,” to six years’ imprisonment and five years of post-release supervision for conspiracy to distribute cocaine.  On March 7, 2023, Judge Seybert sentenced Maxwell’s co-defendant Anthony Cyntje, a New Jersey correction officer, to 72 months’ imprisonment for his role in the drug trafficking conspiracy.  Maxwell’s remaining four co-defendants pleaded guilty and are awaiting sentencing.

Breon Peace, United States Attorney for the Eastern District of New York; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Raymond A. Tierney, District Attorney for Suffolk County; and Rodney K. Harrison, Commissioner, Suffolk County Police Department (SCPD), announced the sentence.

According to court filings, from approximately June 2019 through June 2020, the defendants distributed more than 100 kilograms of cocaine, heroin, fentanyl and crack cocaine across Long Island and New Jersey.  The defendants obtained the narcotics on the west coast and used the United States Postal Service and drivers with hidden vehicle compartments to transport the controlled substances across the country to Suffolk County, where they were stored.  The drugs were then distributed to dealers, who sold them on Long Island and in New Jersey.  Five of the defendants also used firearms to protect their drug organization and distribution chain.  Defendants Anthony Leonardi, Robert Leonardi, Brian Sullivan, and Kavaughn Wiggins participated in the purchase and transportation of the narcotics from the west coast to the east coast where they were processed, stored and ultimately resold.  Maxwell was a kilogram-level redistributor for the trafficking organization, and Cyntje transported kilograms of cocaine from Long Island to New Jersey.

Search warrants executed during the investigation resulted in the recovery of approximately $1.5 million in cash, 16 kilograms of cocaine, 2 kilograms of heroin, numerous fentanyl pills, two 9mm handguns, a rifle, a .45 caliber pistol, a .40 caliber pistol, and ammunition.   

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Christopher C. Caffarone and Andrew P. Wenzel, and Special Assistant United States Attorney Jacob T. Kubetz are in charge of the prosecution, with the assistance of Paralegal Specialist Samantha Schroder.

The Defendants:

ANTHONY CYNTJE
Age: 25
Passaic, New Jersey

ANTHONY LEONARDI
Age:  49         
Coram, Long Island

ROBERT LEONARDI
Age: 28
Levittown, Pennsylvania

WILLIE JUNIOR MAXWELL II (also known as “Fetty Wap”)
Age: 31
Paterson, New Jersey

BRIAN SULLIVAN
Age: 27
Lake Grove, Long Island

KAVAUGHN L. WIGGINS (also known as “KV”)
Age: 28
Coram, Long Island

E.D.N.Y. Docket No. 21-CR-452 (JS)

Breon Peace, United States Attorney for the Eastern District of New York, announced today that the United States District Court has approved a consent decree that ends litigation against Lawrence Aviation Industries, Inc. (LAI) and its former CEO and owner for violations of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), commonly known as the Superfund statute.  The resolution will allow for the redevelopment of the Port Jefferson Station, New York property where LAI operated.

The Superfund statute protects human health and the environment, while safeguarding taxpayer dollars, by holding parties that contributed to contamination responsible for cleaning it up.  Since 1980, the Environmental Protection Agency’s (EPA) Superfund program has managed the cleanup of the nation’s high-priority hazardous sites and has responded to environmental emergencies, oil spills, and natural disasters.

The LAI Superfund Site includes an area approximately 125 acres in size located off Sheep Pasture Road in Port Jefferson in Suffolk County, New York.  Pursuant to the terms of the Consent Decree, which was approved by United States District Judge Joan M. Azrack, the six parcels comprising the Site will be enhanced in value and sold for redevelopment by a company established by the Suffolk County Landbank Corporation.  The Consent Decree provides that the possible future uses of the property will include a regionally significant infrastructure project and an industrial park.   

“This settlement will enable a previously contaminated property to be put to uses that will benefit Port Jefferson and the greater Suffolk County community,” said United States Attorney Breon Peace.  “In the process, the EPA will recover at least some of the enormous costs expended in remediating the LAI Superfund Site and protecting our environment from hazardous substances.”

Mr. Peace expressed his gratitude to the EPA for its partnership in litigating and resolving the Government’s claims.

“This settlement that will not only recover some of the costs of cleaning up the LAI Superfund site but also pave the way for its redevelopment and revitalization," said Regional Administrator Lisa F. Garcia. "This is a win-win situation for the environment and the community of Port Jefferson Station, which will benefit from new infrastructure and economic opportunities long into the future.”

LAI conducted titanium sheet metal manufacturing operations at the Site, mostly for the aeronautics industry, from 1959 to approximately 2004.  The EPA determined that LAI’s operations resulted in releases of a number of hazardous substances and contaminants into the environment, including trichloroethene (TCE), acid wastes, oils, sludge, metals, and other plant wastes.  As a result, the Site was placed on the Superfund National Priorities List  and the EPA has since conducted a number of response actions at the Site. These actions have included construction of treatment systems designed to capture, treat, and prevent further migration of TCE, a known carcinogen, in groundwater beneath the Site. It is the EPA’s intention to treat the groundwater to the point that the water can again be used as part of the drinking water supply. In addition, the EPA has remediated soil at the Site by removing polychlorinated biphenyls (PCBs), another known carcinogen, removed asbestos from buildings at the Site, and installed soil vapor mitigation systems in several nearby locations which are inspected annually.

  In order to recover EPA’s response costs, the United States filed suit against LAI and its owner and CEO, Gerald Cohen, asserting five claims for relief pursuant to CERCLA. See United States v. Lawrence Aviation Industries, Inc, No. CV-06-04818 (JMA).  After trial on the merits, the Court ruled in favor of the Government by Order dated March 19, 2019, finding LAI and Cohen liable to the EPA for $48,116,024.31 in costs and $750,000 each in penalties. The Court also found that the EPA had valid liens on the LAI property. 

Following the trial, the only remaining question was the relative priority of claims of interest filed against the property by other federal agencies, New York State, Suffolk County, and several private parties as well as the EPA. The Consent Decree resolves this remaining issue by allocating recoveries from the sale of the property among the EPA and other claimants.

The case is being handled by Assistant United States Attorney Richard K. Hayes, with the assistance of EPA Region 2 attorneys James Doyle, Leilani Davis and Andrea Leshak.  

A New York man pleaded guilty today to filing a false corporate tax return for his construction business.

According to court documents and statements made in court, Pawel A. Bartoszek of Lake Grove, New York, owned and operated a construction company, Mega State Inc. From 2015 through 2017, Bartoszek cashed checks he received from Mega State clients for services rendered rather than deposit them in the company’s bank account. As a result, Bartoszek concealed approximately $6.1 million in business income from his tax return preparer and caused the tax returns for Mega State submitted to the IRS to falsely understate its gross income.

Bartoszek is scheduled to be sentenced on Sept. 26, and faces a maximum penalty of three years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Breon Peace for the Eastern District of New York made the announcement.

IRS-Criminal Investigation is investigating the case.

Trial Attorneys Ann M. Cherry and Catriona Coppler of the Justice Department’s Tax Division are prosecuting the case.

Earlier today, at the federal courthouse in Brooklyn, Michael Perri, a former New York City Police Department (NYPD) police officer, was sentenced by United States District Judge Rachel P. Kovner to 33 months of imprisonment and a $25,000 fine for conspiring to use interstate facilities to commit bribery.  Perri has already paid the government over $158,000 in forfeiture.  During the relevant period, Perri was a recently retired NYPD police officer formerly assigned to the 107th Precinct in Queens.  Perri pleaded guilty to the charge in November 2022.  Perri’s co-defendant, James Davneiro, a NYPD police officer in the 107th Precinct during the relevant period, was sentenced in March 2023 to one year of imprisonment after pleading guilty to the same offense.  Another of Perri’s co-defendants, Giancarlo Osma, also a NYPD police officer with the 107th Precinct during the relevant period, was sentenced in April 2023 to 14 months’ imprisonment, after pleading guilty to the same offense.

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Keechant L. Sewell, Commissioner, New York City Police Department (NYPD), announced the sentence.

“Michael Perri, after retiring from the NYPD, conspired with two police officers to betray their oaths and the public with promises of easy money, and as a result, they have all been sentenced to prison for their corruption,” stated United States Attorney Peace.  “This Office will vigorously investigate and prosecute public servants and their associates who exploit their positions of power for private gain.”

“Dedicated to uncovering and eradicating corruption in all its forms, investigators with our Internal Affairs Bureau worked tirelessly since the outset of this case,” stated NYPD Commissioner Sewell.  “There must always be zero tolerance for such betrayals of public trust. I thank our partners with the FBI’s Public Corruption Unit and everyone from the U.S. Attorney’s Office for the Eastern District who helped to guide this case through to its conclusion.”

According to court filings, Perri orchestrated a scheme to pay thousands of dollars in bribes to co-defendants Davneiro and Osma for their corrupt agreement to assist an automobile repair and tow trucking business that Perri had begun operating upon his retirement from the NYPD (the “Business”).  Beginning in May 2020, Davneiro and Osma responded to automobile accidents and directed the damaged vehicles to the Business operated by Perri, instead of using the NYPD’s Directed Accident Response Program (DARP), which requires NYPD officers to identify an appropriate licensed tow trucking business to respond to the scene of the automobile accident and remove the damaged vehicles from the scene.  To ensure that no particular business receives favored treatment, NYPD officers are required to use a computer system that randomly selects a licensed tow trucking business.  Davneiro and Osma bypassed DARP and directed damaged vehicles directly to the Business in exchange for thousands of dollars in bribe payments paid by Perri.  Perri, Davneiro, and Osma continued to participate in the scheme until May 2021, when they were arrested.  In total, Davneiro and Osma steered at least 73 vehicles damaged in automobile accidents to Perri, resulting in total profits to the Business of more than $150,000.  In exchange, Perri paid Davneiro and Osma more than $50,000 in bribes in total.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorney Ryan C. Harris is in charge of the prosecution. 

The Defendants:

JAMES DAVNEIRO
Age:  44
Bayside, New York

GIANCARLO OSMA
Age:  40
Deer Park, New York

MICHAEL PERRI
Age:  34
East Islip, New York

E.D.N.Y. Docket No. 21-CR-508 (RPK)

The Brookdale Hospital Medical Center, a nonprofit hospital based in Brooklyn, has agreed to pay $300,000 to the United States to resolve allegations that it violated the False Claims Act based on the conduct of former employees who engaged in a scheme to defraud the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).  Brookdale cooperated fully throughout the investigation.  The settlement agreement, which resolved claims under the Federal False Claims Act, was approved yesterday by United States District Judge I. Leo Glasser. 

Breon Peace, United States Attorney for the Eastern District of New York and Bethanne M. Dinkins, Special Agent-in-Charge, United States Department of Agriculture, Office of Inspector General (USDA-OIG), announced the settlement.

“Our Office worked with Brookdale to arrive at a fair and just resolution that holds Brookdale accountable while crediting its cooperation,” stated United States Attorney Peace.  “This settlement demonstrates our Office’s commitment to holding healthcare providers accountable when their employees engage in misconduct that defrauds federal programs like the USDA-funded WIC program.”    

Mr. Peace expressed his gratitude for the support of the New York State Department of Health, Bureau of Special Investigations for their assistance in investigating these claims.

“The WIC program was created to provide food and nutrition to those who truly need this assistance,” stated USDA-OIG Special Agent-in-Charge Bethanne M. Dinkins. “Those who are involved in fraud and abuse of USDA-funded programs will be investigated by our office to the fullest extent.  Our joint investigation with the New York State Department of Health, Bureau of Special Investigations identified those who sought to defraud WIC.  USDA-OIG will continue to dedicate investigative resources, working with our law enforcement and prosecutorial partners, in order to protect the integrity of these programs.” 

The USDA-funded WIC program provides grants to states for supplemental foods, health care referrals, and nutrition education for lower-income pregnant, breastfeeding, and non-breastfeeding postpartum women, and to infants and children who are found to be at nutritional risk.  The United States contends that between 2010 and 2016, former Brookdale employees, including the former director of Brookdale’s WIC program, engaged in a scheme to defraud the WIC program by, among other things, causing ineligible persons to be qualified for WIC benefits and misappropriating WIC program funds.  The United States further alleges that these former employees falsified time sheets and other records concerning work purportedly performed by breastfeeding peer counselors, and falsified budget records to inflate Brookdale’s purported requirements for WIC funds. 

The settlement includes the resolution of a civil action brought under the qui tam or whistleblower provisions of the False Claims Act against Brookdale.   Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendant.  The qui tam case is captioned United States ex rel. Young v. The Brookdale Hospital Medical Center, No. 19-CV-2272 (E.D.N.Y.). 

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The government’s case was handled by Assistant United States Attorney Michael J. Castiglione.

The Defendant:

The Brookdale Hospital Medical Center

E.D.N.Y. Docket No. 19-CV-2272 (ILG)

A federal court in the Eastern District of New York has permanently enjoined a tax return preparer and her Brooklyn-based business from preparing federal tax returns for others and from owning, operating, or working for any tax return preparation business in the future.

The civil complaint filed in the case alleged that Melida Portorreal, through her tax return preparation company, International Travel Multi & Tax Corp., prepared fraudulent federal income tax returns for others. According to the complaint, Portorreal prepared and filed fraudulent federal tax returns for others that included the following schemes:

• reporting false filing statuses, including, in at least one instance, using one customer’s name and social security number to qualify another customer for Head of Household filing status without either customer’s knowledge or consent;
• fabricating erroneous itemized deductions to reduce taxable income, including false student loan interest deductions, false educator expense deductions, and false employee business expense deductions;
• fabricating business expenses; and
• claiming non-deductible expenses on customers’ tax returns in order to obtain entitlement to the earned income tax credit and the child tax credit.

The complaint alleges the IRS estimated that Portorreal filed returns due for the 2018, 2019, and 2020 tax years that caused losses to the United States exceeding $1 million in each year.

According to the court’s order, Portorreal and her company consented to entry of the injunction, which permits the United States to conduct post-judgment discovery to monitor compliance with the injunction. The order requires that they (1) send notice of the injunction to each person for whom Portorreal and her company prepared federal tax returns, amended tax returns, or claims for refund from February 25, 2021 through May 31 2022, and (2) post an electronic copy of the injunction on any business social media profile currently maintained or created over the next five years.

Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

Shady tax return preparers remain a concern of the IRS, which recently warned taxpayers about unscrupulous tax return preparers are part of the IRS’s Dirty Dozen series. Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers 10 tips to avoid tax season fraud and ways to safeguard their personal information.

In the past decade, the Department of Justice Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

A criminal complaint was unsealed today in federal court in Brooklyn charging Dr. Nikolaos “Nikos” Bogonikolos with wire fraud conspiracy and smuggling.  Bogonikolos, a Greek national, was arrested in Paris, France on May 9, 2023 and remains in custody pending the resolution of extradition proceedings. 

Breon Peace, United States Attorney for the Eastern District of New York, Matthew G. Olsen of the Justice Department’s National Security Division, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Jonathan Carson, Special Agent-in-Charge, Bureau of Industry and Security (BIS), Office of Export Enforcement, New York Field Office announced the charges.

“As alleged, while ostensibly operating as a defense contractor for NATO and other ally countries, the defendant and his Aratos Group were double dealing, helping to fuel Russia’s war effort and their development of next generation weapons,” stated United States Attorney Peace.  “Our Office continues to work tirelessly to ensure that disruptive technologies do not fall into the wrong hands.”

Mr. Peace thanked the Justice Department’s Office of International Affairs for their assistance in this case, the FBI’s Legal Attaché offices in Paris and the Netherlands, and the U.S. Customs and Border Protection Attaché office in Paris for their assistance in this case.  The United States thanks the French and Dutch authorities for their assistance.

“These charges demonstrate the Justice Department’s commitment to preventing sensitive technology from falling into the hands of foreign adversaries, including Russia, China, and Iran,” said Matthew G. Olsen of the Justice Department’s National Security Division. “We will not tolerate those who would violate U.S. laws to allow authoritarian regimes and other hostile nations to use advanced technology to threaten U.S. national security and undermine democratic values around the world.”

“As alleged, Bogonikolos conspired with a network of companies orchestrated by the Russian intelligence services to fraudulently acquire and then smuggle U.S.-origin military and dual-use technologies to aid the Russian defense and security sectors. Bogonikolos procured sensitive equipment meeting NATO specifications designed for tactical battlefield conditions as well as components with applications in space-based and cryptographic communications, on behalf of his Russian intelligence handlers seeking to improve their country’s warfighting capabilities. This case highlights the FBI’s commitment to keeping critical technologies away from America’s adversaries, and dismantling the criminal networks complicit in Russia’s war of aggression," stated FBI Assistant Director in Charge Driscoll.

“As alleged, the defendant and his company not only violated US law, but further assisted Russia’s illegal war of aggression to include the development of disruptive technologies,” stated BIS Special Agent-in-Charge Carson.  “BIS’s Office of Export Enforcement, working with our Strike Force partners, will continue to aggressively investigate export violations and bring violators to justice wherever-located-worldwide.”

As alleged in the complaint, the defendant headed the Aratos Group (Aratos), a collection of defense and technology companies in the Netherlands and Greece, which are both member countries of the North Atlantic Treaty Organization (NATO).  According to Aratos’ website, the companies’ areas of expertise included “Space Technologies,” “Homeland Security,” “Blockchain,” and “Counter-Drone Systems.” 

One of Aratos’ subsidiaries, Aratos Systems BV, was a finalist in the NATO Innovation Challenge for space applications in 2021 for a proposal involving the use of artificial intelligence and blockchain technology for satellites and spacecraft.  In the proposal, the defendant represented that he had experience advising the European Parliament and “governments worldwide,” and that Aratos had supplied defense equipment and related technologies to countries in the Middle East, Africa and Asia.

However as alleged in the complaint, since 2017 the defendant has been involved in smuggling U.S.-origin military and dual-use technologies to Russia in violation of U.S. law.  These highly regulated and sensitive components included advanced electronics and sophisticated testing equipment used in military applications, including quantum cryptography and nuclear weapons testing, as well as tactical battlefield equipment.  The defendant claimed that these items were to be used by Aratos, when in reality they were illegally reshipped and sent to Russia.  Some of the Russian end users included nuclear and quantum research facilities, as well as “Military Unit 33949,” which is part of the Russian Foreign Intelligence Service, known as the “SVR.”  As described in the complaint, many of these orders were solicited by Serniya Engineering and Sertal LLC (the “Serniya Network”), Moscow-based companies that operate under the direction of Russian intelligence services.  Following Russia’s invasion of Ukraine in February 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce (DOC) Bureau of Industry and Security (BIS) levied sanctions against Serniya, Sertal, and several individuals and companies used in the scheme, calling them “instrumental to the Russian Federation’s war machine.”

As alleged in the complaint, the defendant was recruited as a procurement agent for Russia in and around 2017.  In an email message with a Serniya affiliate, on December 27, 2017, the defendant was told to come to Moscow alone “since the agenda will be a very sensitive one.”  Regarding one subsequent order, the defendant advised that he would falsify an export license, saying “I sign that the items are only for Netherlands; . . . Sensitive case . . . For the same reason I cannot press the [U.S.] supplier.”  The defendant also signed false end use statements and provided them to U.S. companies, certifying that Aratos was the end user of the requested items, that Aratos would not reexport the goods elsewhere, and that the goods would not be used for weapons development.

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

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorney Artie McConnell is in charge of the prosecution, along with Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section, with assistance from Litigation Analyst Ben Richmond. 

The Defendant:

NIKOLAOS BOGONIKOLOS
AGE:  59
Athens, Greece

E.D.N.Y. Docket No. 23-MJ-412

Earlier today, in federal court in Central Islip, New York, United States District Judge Gary R. Brown sentenced Daniel Mullan to 30 years’ imprisonment for sexually exploiting a child and the possession of child pornography.  According to court filings and facts presented during the sentencing, Mullan sexually exploited a child in between 1999 and 2006 as part of his ongoing sexual abuse of children and production of child pornography.  Mullan was also convicted of possessing large quantities of child pornography between 2014 and 2017, much of which he produced over the course of decades.  Based upon the criminal statutes in place at the time of Mullan’s offenses, 30 years’ imprisonment was the maximum term allowed by law.  

Breon Peace, United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

Today’s sentence is a just punishment for the defendant’s years of heinous acts against minors, and sends a message to all who seek to harm innocent children,” stated United States Attorney Breon Peace.  “This Office and our law enforcement partners will continue to make every effort to ensure that those who contribute to the exploitation and victimization of children will be brought to justice.” 

Mr. Peace extended his grateful appreciation to the FBI Long Island Child Exploitation and Human Trafficking Task Force, which is made up of FBI and local law enforcement agencies, for its investigative work and assistance in the case.

According to court filings, in the summer of 2017 the FBI and the Suffolk County Police Department executed search warrants on Mullan’s Elmont, New York residence and a storage unit Mullan had rented in Melville, New York.  During the searches, law enforcement recovered hundreds of images and videos of child sexual abuse.  Several of the videos depicted Mullan engaged in sexual acts with minor teenage boys dating back to the early 1980s. 

Additional investigation by the FBI located numerous victims, including a minor who Mullan had travelled with domestically and internationally between 1999 and 2006.  Mullan had recorded his sexual abuse of this victim.  Another search warrant executed by law enforcement on a safe deposit box located over $300,000 in cash that Mullan had intended to use as “hush money” for one of his victims.  Mullan was extradited to the United States from Ireland on August 15, 2019.

This prosecution is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by United States Attorneys’ Offices and the Department of Justice Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The government’s case is being handled by the Long Island Criminal Division.  Assistant United States Attorneys Michael Maffei and Madeline O’Connor are in charge of the prosecution.  The Department of Justice’s Office of International Affairs assisted in the extradition. 

The Defendant:

DANIEL MULLAN
Age:  83
Elmont, New York

E.D.N.Y. Docket No. 17-CR-495 (GRB)

CENTRAL ISLIP, NY – A 13-count indictment was unsealed today in the United States District Court for the Eastern District of New York charging George Anthony Devolder Santos, better known as “George Santos,” a United States Congressman representing the Third District of New York, with seven counts of wire fraud, three counts of money laundering, one count of theft of public funds, and two counts of making materially false statements to the House of Representatives.

The indictment was returned yesterday under seal by a federal grand jury sitting in Central Islip, New York. Santos was arrested this morning and will be arraigned this afternoon before U.S. Magistrate Judge Arlene R. Lindsay at the federal courthouse in Central Islip, New York.

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Anne T. Donnelly, District Attorney, Nassau County, announced the charges.

“This indictment seeks to hold Santos accountable for various alleged fraudulent schemes and brazen misrepresentations,” stated United States Attorney Peace.  “Taken together, the allegations in the indictment charge Santos with relying on repeated dishonesty and deception to ascend to the halls of Congress and enrich himself.  He used political contributions to line his pockets, unlawfully applied for unemployment benefits that should have gone to New Yorkers who had lost their jobs due to the pandemic, and lied to the House of Representatives. My Office and our law enforcement partners will continue to aggressively root out corruption and self-dealing from our community’s public institutions and hold public officials accountable to the constituents who elected them.”

“The Criminal Division’s Public Integrity Section is committed to rooting out fraud and corruption, especially when committed by our elected officials,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “As alleged, Santos engaged in criminal conduct intended to deceive and defraud the American public. As this indictment reflects, the Department of Justice will hold accountable anyone who engages in such criminality.”

“As today's enforcement action demonstrates, the FBI remains committed to holding all equally accountable under the law.  As we allege, Congressman Santos committed federal crimes, and he will now be forced to face the consequences of his actions.  I would like to commend the diligent efforts of the investigative and prosecutorial teams in this matter,” stated FBI Assistant Director-in-Charge Driscoll.

“At the height of the pandemic in 2020, George Santos allegedly applied for and received unemployment benefits while he was employed and running for Congress,” stated District Attorney Donnelly.  “As charged in the indictment, the defendant’s alleged behavior continued during his second run for Congress when he pocketed campaign contributions and used that money to pay down personal debts and buy designer clothing. This indictment is the result of a lengthy collaboration between law enforcement agencies, and I thank our partners at the U.S. Attorney’s Office, the Department of Justice and the Federal Bureau of Investigation for their dedication to rooting out public corruption.” 

Mr. Peace also thanked the U.S. Department of Labor, Office of Inspector General, the New York State Department of Labor (NYS DOL), and the Queens County District Attorney’s Office for their assistance.

As alleged in the indictment, Santos, who was elected to Congress last November and sworn in as the U.S. Representative for New York’s Third Congressional District on January 7, 2023, engaged in multiple fraudulent schemes.

Fraudulent Political Contribution Solicitation Scheme

Beginning in September 2022, during his successful campaign for Congress, Santos operated a limited liability company (Company #1) through which he allegedly defrauded prospective political supporters.  Santos enlisted a Queens-based political consultant (Person #1) to communicate with prospective donors on Santos’s behalf.  Santos allegedly directed Person #1 to falsely tell donors that, among other things, their money would be used to help elect Santos to the House, including by purchasing television advertisements. In reliance on these false statements, two donors (Contributor #1 and Contributor #2) each transferred $25,000 to Company #1’s bank account, which Santos controlled.

As alleged in the indictment, shortly after the funds were received into Company #1’s bank account, the money was transferred into Santos’s personal bank accounts—in one instance laundered through two of Santos’s personal accounts.  Santos allegedly then used much of that money for personal expenses.  Among other things, Santos allegedly used the funds to make personal purchases (including of designer clothing), to withdraw cash, to discharge personal debts, and to transfer money to his associates.  

Unemployment Insurance Fraud Scheme

Beginning in approximately February 2020, Santos was employed as a Regional Director of a Florida-based investment firm (Investment Firm #1), where he earned an annual salary of approximately $120,000.  By late-March 2020, in response to the outbreak of COVID-19 in the United States, new legislation was signed into law that provided additional federal funding to assist out-of-work Americans during the pandemic.

In mid-June 2020, although he was employed and was not eligible for unemployment benefits, Santos applied for government assistance through the New York State Department of Labor, allegedly claiming falsely to have been unemployed since March 2020.  From that point until April 2021—when Santos was working and receiving a salary on a near-continuous basis and during his unsuccessful run for Congress—he falsely affirmed each week that he was eligible for unemployment benefits when he was not.  As a result, Santos allegedly fraudulently received more than $24,000 in unemployment insurance benefits.

False Statements to the House of Representatives

Finally, the indictment describes Santos’s alleged efforts to mislead the House of Representatives and the public about his financial condition in connection with each of his two Congressional campaigns.

Santos, like all candidates for the House, had a legal duty to file with the Clerk of the House of Representatives a Financial Disclosure Statement (House Disclosures) before each election.  In each of his House Disclosures, Santos was personally required to give a full and complete accounting of his assets, income, and liabilities, among other things.  He certified that his House Disclosures were true, complete, and correct.

In May 2020, in connection with his first campaign for election to the House, Santos filed two House Disclosures in which he allegedly falsely certified that, during the reporting period, his only earned income consisted of salary, commission, and bonuses totaling $55,000 from another company (Company #2), and that the only compensation exceeding $5,000 he received from a single source was an unspecified commission bonus from Company #2.  In actuality, Santos allegedly overstated the income he received from Company #2 and altogether failed to disclose the salary he received from Investment Firm #1.

In September 2022, in connection with his second campaign for election to the House, Santos filed another House Disclosure, in which he allegedly overstated his income and assets.  In this House Disclosure, he falsely certified that during the reporting period:

• He had earned $750,000 in salary from the Devolder Organization LLC, a Florida‑based entity of which Santos was the sole beneficial owner;
• He had received between $1,000,001 and $5,000,000 in dividends from the Devolder Organization LLC;
• He had a checking account with deposits of between $100,001 and $250,000; and
• He had a savings account with deposits of between $1,000,001 and $5,000,000. 

As alleged in the indictment, these assertions were false: Santos had not received from the Devolder Organization LLC the reported amounts of salary or dividends and did not maintain checking or savings accounts with deposits in the reported amounts.  Further, Santos allegedly failed to disclose that, in 2021, he received approximately $28,000 in income from Investment Firm #1 and more than $20,000 in unemployment insurance benefits from the NYS DOL.

The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of the charges, Santos faces a maximum penalty of 20 years in prison for the top counts.  A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI is investigating the case with assistance from the Nassau County District Attorney’s Office, the IRS-Criminal Investigation, and the U.S. Department of Labor, Office of Inspector General.

The government’s case is being prosecuted by the Office’s Public Integrity Section, the Long Island Criminal Division, and the Criminal Division’s Public Integrity Section.  Assistant United States Attorneys Ryan Harris, Anthony Bagnuola, and Laura Zuckerwise, along with Trial Attorneys Jolee Porter and Jacob Steiner, are in charge of the prosecution with assistance from Paralegal Specialist Rachel Friedman. Senior Litigation Counsel Victor R. Salgado of the Criminal Division’s Public Integrity Section provided substantial contributions to the prosecution.

The Defendant:

GEORGE ANTHONY DEVOLDER SANTOS
Age:  34
Washington, District of Columbia

E.D.N.Y. Docket No. 23-CR-197

БРУКЛИН, НЬЮ-ЙОРК – Сегодня, Министерство юстиции США объявило о завершении санкционированной судом операции под кодовым названием «МЕДУЗА» по пресечению деятельности глобальной одноранговой сети компьютеров, зараженных высокотехнологичным вредоносным ПО под названием «Snake», которое правительство Соединенных Штатов связывает с подразделением в Центре 16 Федеральной службы безопасности Российской Федерации (ФСБ). На протяжении почти 20 лет данное подразделение, упоминаемое в судебных документах как «Турла», использовало версии вредоносного ПО «Snake» для хищения конфиденциальных документов в, по крайней мере 50 странах, из сотен компьютерных систем, принадлежащих правительствам стран-членов Организации Североатлантического договора (НАТО), журналистам и другим объектам внимания представляющих интерес для Российской Федерации. После хищения данных документов, «Турла» извлекала их через негласную сеть компьютеров в Соединенных Штатах и по всему миру, заражённых ПО «Snake» без ведома их владельцев. 

В результате операции «MEDUSA» вредоносное ПО «Turla Snake» на заражённых компьютерах было отключено с помощью созданного ФБР инструмента под названием «PERSEUS», который давал команды, заставившие вредоносное ПО «Snake» перезаписать собственные ключевые компоненты. На территории США операция была проведена ФБР в соответствии с ордером на обыск, выданным федеральным судьей-магистратом Восточного округа Нью-Йорка Шерил Л. Поллак, санкционировавшим удаленный доступ к заражённым компьютерам. Сегодня утром, суд разгласил отредактированные версии письменного показания под присягой, представленного в обоснование ходатайства о выдаче ордера на обыск, и самого ордера на обыск, выданного судом. В целях содействия потерпевшим за пределами Соединенных Штатов, ФБР взаимодействует с местными властями, как предоставляя уведомления о заражениях ПО «Snake» так и рекомендации по принятию корректировочных мер, в странах под юрисдикцией местных властей.

Меррик Б. Гарланд, Генеральный прокурор США; Брион Пис, федеральный прокурор США по Восточному округу Нью-Йорка; Лиза О. Монако, заместитель Генерального прокурора США, Министерство юстиции США и Майкл Д. Дрисколл, заместитель директора-начальник Нью-Йоркского регионального отделения ФБР, объявили о данной операции.

«Министерство юстиции вместе с нашими международными партнерами ликвидировало глобальную сеть зараженных вредоносным ПО компьютеров, которую российское правительство использовало в течение почти двух десятилетий для ведения кибершпионажа, в том числе против наших союзников по НАТО», — заявил Генеральный прокурор Гарланд. «Мы будем продолжать укреплять нашу коллективную оборону против дестабилизирующей деятельности российского режима по подрыву безопасности Соединенных Штатов и наших союзников».

«Россия использовала высокотехнологичное вредоносное ПО для хищения конфиденциальной информации у наших союзников, маскируя её пропуском через сеть зараженных компьютеров в Соединенных Штатах, цинично пытаясь скрыть свои преступления. Ответ на угрозу кибершпионажа требует творческого подхода и готовности использовать все законные средства для защиты нашей страны и наших союзников», — заявил федеральный прокурор США Пис. «Санкционированные судом обыск и работы по устранению последствий заражения, проведенные в удаленном режиме и объявленные сегодня, демонстрируют приверженность моего Управления и наших партнеров к использованию всех инструментов, имеющихся в нашем распоряжении, для защиты американского народа».

«Благодаря высокотехнологичной операции, которая обратила российское вредоносное ПО против себя, правоохранительные органы США нейтрализовали один из российских инструментов кибершпионажа высочайшего уровня, применяемого в течение двух десятилетий для продвижения авторитарных целей России», — заявила заместитель Генерального прокурора Лиза Монако. «Сочетая эту операцию с обнародованием информации, необходимой потерпевшим для самозащиты, Министерство юстиции продолжает ставить потерпевших в центр внимания в нашей работе по борьбе с киберпреступностью и активно сражаться со злоумышленниками в киберпространстве».
 

«Операция, о которой мы сегодня объявили, успешно пресекла деятельность ведущего инструмента кибершпионажа российского правительства. В течение двух десятилетий вредоносное ПО позволяло российской разведке заражать компьютерные системы и похищать конфиденциальную информацию, нанося ущерб не только правительству США и нашим союзникам, но и частному сектору. Это должно послужить напоминанием России и любой другой враждебной стране, готовой похищать информацию, что ФБР и наши партнеры сполчены в наших усилиях по защите наших стран», – заявил заместитель директора-начальник Нью-Йоркского регионального отделения ФБР Дрисколл.

Как подробно описано в судебных документах, правительство США уже почти 20 лет расследует вредоносное ПО «Snake» и связанные со «Snake» инструменты. Государственные органы США следят за сотрудниками ФСБ, прикомандированными к «Турла» и проводящими ежедневные операции с применением «Snake» с установленного объекта ФСБ в городе Рязань, РФ. 

Хотя ПО «Snake» было предметом нескольких отчетов в области кибербезопасности на протяжении всего своего существования, «Turla» осуществляла многочисленные обновления и редакции, и выборочно применяла его с тем чтобы ПО «Snake» оставалось самым высокотехнологичным долгосрочным внедрением вредоносного ПО, применяемым ФСБ в кибершпионаже. В случае непресечения его деятельности, внедрение ПО «Snake» на зараженных компьютерах, сохраняется в системе на неопределенное время, как правило, оставаясь незамеченным владельцем компьютера или его авторизованными пользователями. По наблюдениям ФБР, ПО «Snake» остается на некоторых компьютерах, несмотря на усилия потерпевшего по устранению заражения.  

ПО «Snake» даёт операторам «Турла» возможность удаленного применения отдельных вредоносных программ для расширения функциональности «Snake» в целях выявления и хищения конфиденциальной информации и документов, хранящихся на определенных компьютерах.  Прежде всего, набор зараженных «Snake» компьютеров по всему миру, действует как негласная одноранговая сеть, применяющая оптимизированные протоколы передачи данных, предназначенные для препятствования мониторингу и сбору данных, службами радиотехнической разведки Западных и иных стран. 

Для маршрутизации данных, извлеченных из целевых систем для передачи операторам «Turla» в России, через многочисленные ретрансляционные узлы, разбросанные по всему миру, «Турла» использует сеть «Snake». Например, ФБР и партнеры ФБР из разведывательного сообщества США, совместно с государственными органами стран-союзников, следили за использованием ФСБ сети «Snake» для извлечения данных из конфиденциальных компьютерных систем, в том числе, систем применяемых правительствами стран-членов НАТО, путем маршрутизации этих данных через компьютеры, зараженные «Snake» в США, без ведома их владельцев.

Как описано в судебных документах, с помощью анализа вредоносной программы «Snake» и сети «Snake», ФБР разработало метод расшифровывания и декодирования обмена информацией в сети «Snake». Используя информацию, собранную посредством наблюдения за сетью «Snake» и анализа вредоносного ПО «Snake», ФБР разработало инструмент под названием «PERSEUS», который устанавливает сеансы связи с внедрением вредоносного ПО «Snake» на определенном компьютере. Впоследствии, «PERSEUS» выдает команды, вызывающие самостоятельное отключение внедрения «Snake» без причинения ущерба самому компьютеру или легитимным программам, установленным на компьютере.

Сегодня, для поддержки сетевых защитников по всему миру, ФБР, Агентство национальной безопасности, Агентство по кибербезопасности и защите инфраструктуры, Национальная миссия по кибербезопасности при Киберкомандовании США, и шесть других спецслужб и агенств по кибербезопасности каждой из стран-участников альянса «Пять глаз», опубликовали совместную рекомендацию по кибербезопасности («Совместная рекомендация»), содержащую подробную техническую информацию о вредоносном ПО «Snake», которую специалисты по кибербезопасности смогут применять для идентификации и защиты от новых заражений вредоносным ПО «Snake» в их сетях. С Совместной рекомендацией можно ознакомиться здесь. ФБР и Государственный департамент США также предоставляют дополнительную информацию местным властям в странах, где были обнаружены компьютеры, подвергшиеся заражению вредоносным ПО «Snake».

Несмотря на то, что операция «MEDUSA» отключила вредоносное ПО «Snake» на заражённых компьютерах, пострадавшим следует принять дополнительные меры для предотвращения дальнейшего ущерба. Операция по отключению «Snake» не устранила уязвимости, не искала и не удаляла какие-либо другие вредоносные программы или средства взлома, которые группы хакеров могли разместить в сетях пострадавших. Министерство юстиции настоятельно призывает сетевых защитников ознакомиться с Совместной рекомендацией для получения дальнейших указаний по обнаружению уязвимостей и установлению корректировочных патч-файлов. Более того, как отмечалось в судебных документах, «Турла» часто использует «кейлоггер» вместе со «Snake», который «Турла» может использовать для хищения учетных данных, например, имен пользователей и паролей легитимных пользователей. Потерпевшим следует знать, что «Турла» может использовать эти похищенные учетные данные для восстановления доступа к зараженным компьютерам и другим учетным записям мошенническим путем.

ФБР уведомляет всех владельцев или операторов компьютеров, доступ к которым был произведен в удаленном режиме в соответствии с ордером на обыск, о проведении санкционированной судом операции.

Уголовное расследование использования вредоносного ПО «Snake» ФСБ проводит Управление прокуратуры по национальной безопасности и Управление прокуратуры по борьбе с киберпреступностью. Заместитель федерального прокурора Иэн Ричардсон отвечает за расследование, при содействии Отдела контрразведки и экспортного контроля Управления по национальной безопасности.

Меры по пресечению работы сети вредоносного ПО «Snake» были осуществлены под руководством Нью-Йоркского регионального управления ФБР, Управлением ФБР по борьбе с киберпреступностью, Федеральной прокуратурой США по Восточному округу Нью-Йорка и Отделом контрразведки и экспортного контроля Управления по национальной безопасности. Содействие было также оказано Отделом по компьютерным преступлениям и интеллектуальной собственности Управления по борьбе с уголовной преступностью.

Эти усилия не увенчались бы успехом без сотрудничества многочисленных структур частного сектора, включая тех потерпевших, которые позволили ФБР наблюдать за потоком информации «Snake» в своих системах.

Ордер на обыск:

Относительно поиска информации, связанной с компьютерами, составляющими сеть вредоносного программного обеспечения «Snake».

Реестр Восточного округа Нью-Йорка № 23-MJ-0428 (CLP)

A federal jury in Brooklyn returned a guilty verdict late yesterday afternoon against Christopher Acevedo, the leader of “Wood City,” a violent criminal enterprise which also used the names “Yellow Tape Boyz” and “YTB,” of murder in-aid-of racketeering and causing death through the use of a firearm in connection with the August 26, 2019 fatal shooting of a rival gang associate. The verdict followed a three-week trial before United States District Judge Diane Gujarati. When sentenced, Acevedo faces a mandatory term of life imprisonment.

Breon Peace, United States Attorney for the Eastern District of New York, announced the verdict.

“How senseless it was for Acevedo to callously take a human life to maintain and burnish his status as the leader of a violent street gang whose members felt insulted by the taking of a piece of jewelry,” stated United States Attorney Peace. “With today’s verdict, the defendant will spend the rest of his life in prison. Protecting our communities from gang and gun-related violence is a priority of my Office and I commend the attorneys, Special Agents, and detectives whose work brought the defendant to justice.”

Mr. Peace thanked the Federal Bureau of Investigation, New York Field Office, and the New York City Police Department for their exemplary investigative work on the case. Mr. Peace also thanked the FBI Safe Streets Task Force for its assistance with the case.

The evidence at trial established that since at least 2010, the Wood City gang has been engaged in racketeering activity, including murder, drug trafficking, and various forms of fraud and identity theft. Acevedo was the founder and leader of the gang which was so named because many of its members lived around Woodhull Avenue in Jamaica, New York. Since at least 2011, Wood City has been involved in a war with rival “Snow Gang,” another violent gang based in Queens. During this period, members of Wood City and Snow Gang would regularly taunt and insult each other using social media platforms and phone calls. On August 26, 2019, members of Snow Gang, including one of its leaders, robbed a gold “YTB” chain from a high-ranking member of Wood City while he was at a recording studio in Queens. Shortly after the robbery, the Snow Gang leader posted a photo himself wearing the YTB chain on social media. As a leader of Wood City, Acevedo was expected to retaliate for the chain-snatching to protect his gang’s reputation. The defendant and other Wood City members drove to Snow Gang territory and spotted a vehicle with the Snow Gang leader who had robbed the chain and other members and associates of Snow Gang. After following that vehicle to the front of a deli in the vicinity of 140th Avenue and Springfield Boulevard, Acevedo pulled alongside the vehicle and fired a dozen shots, killing the driver David Hutchinson.

This case is being prosecuted as part of the joint federal, state, and local Project Safe Neighborhoods (PSN) Program, the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys James P. McDonald, Kayla C. Bensing, and Benjamin Weintraub are in charge of the prosecution with the assistance of Paralegal Specialist Brittany Wissel.

The Defendant:

CHRISTOPHER ACEVEDO
Age: 28
Jamaica, New York

E.D.N.Y. Docket No. 21-CR-162 (DG)

The Justice Department today announced the completion of a court-authorized operation, codenamed MEDUSA, to disrupt a global peer-to-peer network of computers compromised by sophisticated malware, called “Snake,” that the United States Government attributes to a unit within Center 16 of the Federal Security Service of the Russian Federation (FSB).  For nearly 20 years, this unit, referred to in court documents as “Turla,” has used versions of the Snake malware to steal sensitive documents from hundreds of computer systems in at least 50 countries, which have belonged to North Atlantic Treaty Organization (NATO) member governments, journalists, and other targets of interest to the Russian Federation.  After stealing these documents, Turla exfiltrated them through a covert network of unwitting Snake-compromised computers in the United States and around the world. 

Operation MEDUSA disabled Turla’s Snake malware on compromised computers through the use of an FBI-created tool named PERSEUS, which issued commands that caused the Snake malware to overwrite its own vital components.  Within the United States, the operation was executed by the FBI pursuant to a search warrant issued by United States Magistrate Judge Cheryl L. Pollak of the Eastern District of New York, which authorized remote access to the compromised computers.  This morning, the Court unsealed redacted versions of the affidavit submitted in support of the application for the search warrant, and of the search warrant issued by the Court.  For victims outside the United States, the FBI is engaging with local authorities to provide both notice of Snake infections within those authorities’ countries and remediation guidance.

Merrick B. Garland, United States Attorney General; Breon Peace, United States Attorney for the Eastern District of New York; Lisa O. Monaco, Deputy Attorney General of the Justice Department; and Michael J. Driscoll, Assistant Director-in-Charge, FBI, New York Field Office, announced the operation.

“The Justice Department, together with our international partners, has dismantled a global network of malware-infected computers that the Russian government has used for nearly two decades to conduct cyber-espionage, including against our NATO allies,” stated Attorney General Garland.  “We will continue to strengthen our collective defenses against the Russian regime’s destabilizing efforts to undermine the security of the United States and our allies.”

“Russia used sophisticated malware to steal sensitive information from our allies, laundering it through a network of infected computers in the United States in a cynical attempt to conceal their crimes.  Meeting the challenge of cyberespionage requires creativity and a willingness to use all lawful means to protect our nation and our allies,” stated United States Attorney Peace.  “The court-authorized remote search and remediation announced today demonstrates my Office and our partners’ commitment to using all of the tools at our disposal to protect the American people.”

 “Through a high-tech operation that turned Russian malware against itself, U.S. law enforcement has neutralized one of Russia’s most sophisticated cyber-espionage tools, used for two decades to advance Russia’s authoritarian objectives,” stated Deputy Attorney General Monaco.  “By combining this action with the release of the information victims need to protect themselves, the Justice Department continues to put victims at the center of our cybercrime work and take the fight to malicious cyber actors.”

“The operation we announced today successfully disrupted the foremost cyber espionage tool of the Russian government.  For two decades, the malware allowed Russian Intelligence to compromise computer systems and steal sensitive information - harming not only the United States Government and our allies but also private sector organizations.  This action should serve as a reminder to Russia and any other hostile nation willing to steal information, the FBI and our partners are united in our efforts to protect our countries,” stated FBI Assistant Director-in-Charge Driscoll.

“For 20 years, the FSB has relied on the Snake malware to conduct cyberespionage against the United States and our allies – that ends today,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department will use every weapon in our arsenal to combat Russia’s malicious cyber activity, including neutralizing malware through high-tech operations, making innovative use of legal authorities, and working with international allies and private sector partners to amplify our collective impact.”

As detailed in court documents, the U.S. government has been investigating Snake and Snake-related malware tools for nearly 20 years. The U.S. government has monitored FSB officers assigned to Turla conducting daily operations using Snake from a known FSB facility in Ryazan, Russia. 

Although Snake has been the subject to several cybersecurity industry reports throughout its existence, Turla has applied numerous upgrades and revisions, and selectively deployed it, all to ensure that Snake remains the FSB’s most sophisticated long-term cyberespionage malware implant.  Unless disrupted, the Snake implant persists on a compromised computer’s system indefinitely, typically undetected by the machine’s owner or authorized users.  The FBI has observed Snake persist on particular computers despite a victim’s efforts to remediate the compromise.

Snake provides its Turla operators the ability to remotely deploy selected malware tools to extend Snake’s functionality to identify and steal sensitive information and documents stored on a particular machine.  Most importantly, the worldwide collection of Snake-compromised computers acts as a covert peer-to-peer network, which utilizes customized communication protocols designed to hamper detection, monitoring, and collection efforts by Western and other signals intelligence services. 

Turla uses the Snake network to route data exfiltrated from target systems through numerous relay nodes scattered around the world back to Turla operators in Russia.  For example, the FBI, its partners in the U.S. Intelligence Community, together with allied foreign governments, have monitored the FSB’s use of the Snake network to exfiltrate data from sensitive computer systems, including those operated by NATO member governments, by routing the transmission of these stolen data through unwitting Snake-compromised computers in the United States.

As described in court documents, through analysis of the Snake malware and the Snake network, the FBI developed the capability to decrypt and decode Snake communications.  With information gleaned from monitoring the Snake network and analyzing Snake malware, the FBI developed a tool, named PERSEUS, that establishes communication sessions with the Snake malware implant on a particular computer, and issues commands that causes the Snake implant to disable itself without affecting the host computer or legitimate applications on the computer.

Today, to empower network defenders worldwide, the FBI, the National Security Agency, the Cybersecurity and Infrastructure Security Agency, the U.S. Cyber Command Cyber National Mission Force, and six other intelligence and cybersecurity agencies from each of the Five Eyes member nations, issued a joint cybersecurity advisory (the “Joint Advisory”) with detailed technical information about the Snake malware that will allow cybersecurity professionals to detect and remediate Snake malware infections on their networks.  The Joint Advisory is available here.  The FBI and U.S. Department of State are also providing additional information to local authorities in countries where computers that have been targeted by the Snake malware have been located.

Although Operation MEDUSA disabled the Snake malware on compromised computers, victims should take additional steps to protect themselves from further harm.  The operation to disable Snake did not patch any vulnerabilities or search for or remove any additional malware or hacking tools that hacking groups may have placed on victim networks.  The Department of Justice strongly encourages network defenders to review the Joint Advisory for further guidance on detection and patching.  Moreover, as noted in court documents, Turla frequently deploys a “keylogger” with Snake that Turla can use to steal account authentication credentials, such as usernames and passwords, from legitimate users.  Victims should be aware that Turla could use these stolen credentials to fraudulently re-access compromised computers and other accounts.

The FBI is providing notice of the court-authorized operation to all owners or operators of the computers remotely accessed pursuant to the search warrant.

The criminal investigation into the FSB’s use of the Snake malware is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorney Ian C. Richardson is in charge of the investigation, with assistance from the National Security Division’s Counterintelligence and Export Control Section.

The efforts to disrupt the Snake malware network were led by the FBI’s New York Field Office, FBI’s Cyber Division, the U.S. Attorney’s Office for the Eastern District of New York, and the National Security Division’s Counterintelligence and Export Control Section.  Assistance was also provided by the Criminal Division’s Computer Crime and Intellectual Property Section.

Those efforts would not have been successful without the partnership of numerous private-sector entities, including those victims who allowed the FBI to monitor Snake communications on their systems.

The Search Warrant:

In the Matter of the Search of Information Associated with Computers Constituting the Snake Malware Network

Eastern District of New York Docket No. 23-MJ-0428 (CLP)

The Justice Department today announced the completion of a court-authorized operation, code-named MEDUSA, to disrupt a global peer-to-peer network of computers compromised by sophisticated malware, called “Snake”, that the U.S. Government attributes to a unit within Center 16 of the Federal Security Service of the Russian Federation (FSB). For nearly 20 years, this unit, referred to in court documents as “Turla,” has used versions of the Snake malware to steal sensitive documents from hundreds of computer systems in at least 50 countries, which have belonged to North Atlantic Treaty Organization (NATO) member governments, journalists, and other targets of interest to the Russian Federation. After stealing these documents, Turla exfiltrated them through a covert network of unwitting Snake-compromised computers in the United States and around the world.

Operation MEDUSA disabled Turla’s Snake malware on compromised computers through the use of an FBI-created tool named PERSEUS, which issued commands that caused the Snake malware to overwrite its own vital components. Within the United States, the operation was executed by the FBI pursuant to a search warrant issued by U.S. Magistrate Judge Cheryl L. Pollak for the Eastern District of New York, which authorized remote access to the compromised computers. This morning, the court unsealed redacted versions of the affidavit submitted in support of the application for the search warrant, and of the search warrant issued by the court. For victims outside the United States, the FBI is engaging with local authorities to provide both notice of Snake infections within those authorities’ countries and remediation guidance.

“The Justice Department, together with our international partners, has dismantled a global network of malware-infected computers that the Russian government has used for nearly two decades to conduct cyber-espionage, including against our NATO allies,” said Attorney General Merrick B. Garland. “We will continue to strengthen our collective defenses against the Russian regime’s destabilizing efforts to undermine the security of the United States and our allies.”

“Through a high-tech operation that turned Russian malware against itself, U.S. law enforcement has neutralized one of Russia’s most sophisticated cyber-espionage tools, used for two decades to advance Russia’s authoritarian objectives,” said Deputy Attorney General Lisa O. Monaco. “By combining this action with the release of the information victims need to protect themselves, the Justice Department continues to put victims at the center of our cybercrime work and take the fight to malicious cyber actors.”

“For 20 years, the FSB has relied on the Snake malware to conduct cyberespionage against the United States and our allies – that ends today,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department will use every weapon in our arsenal to combat Russia’s malicious cyber activity, including neutralizing malware through high-tech operations, making innovative use of legal authorities, and working with international allies and private sector partners to amplify our collective impact.”

“Russia used sophisticated malware to steal sensitive information from our allies, laundering it through a network of infected computers in the United States in a cynical attempt to conceal their crimes. Meeting the challenge of cyberespionage requires creativity and a willingness to use all lawful means to protect our nation and our allies,” said U.S. Attorney Breon Peace for the Eastern District of New York. “The court-authorized remote search and remediation announced today demonstrates my office and our partners’ commitment to using all of the tools at our disposal to protect the American people.”

“Today’s announcement demonstrates the FBI’s willingness and ability to pair our authorities and technical capabilities with those of our global partners to disrupt malicious cyber actors,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “When it comes to combating Russia’s attempts to target the United States and our allies using complex cyber tools, we will not waver in our work to dismantle those efforts. When it comes to any nation state engaged in cyber intrusions which put our national security at risk, the FBI will leverage all tools available to impose cost on those actors and to protect the American people.”

As detailed in court documents, the U.S. Government has been investigating Snake and Snake-related malware tools for nearly 20 years. The U.S. government has monitored FSB officers assigned to Turla conducting daily operations using Snake from a known FSB facility in Ryazan, Russia.

Although Snake has been the subject to several cybersecurity industry reports throughout its existence, Turla has applied numerous upgrades and revisions, and selectively deployed it, all to ensure that Snake remains Turla’s most sophisticated long-term cyberespionage malware implant. Unless disrupted, the Snake implant persists on a compromised computer’s system indefinitely, typically undetected by the machine’s owner or authorized users. The FBI has observed Snake persist on particular computers despite a victim’s efforts to remediate the compromise.

Snake provides its Turla operators the ability to remotely deploy selected malware tools to extend Snake’s functionality to identify and steal sensitive information and documents stored on a particular machine. Most importantly, the worldwide collection of Snake-compromised computers acts as a covert peer-to-peer network, which utilizes customized communication protocols designed to hamper detection, monitoring, and collection efforts by Western and other signals intelligence services.

Turla uses the Snake network to route data exfiltrated from target systems through numerous relay nodes scattered around the world back to Turla operators in Russia. For example, the FBI, its partners in the U.S. Intelligence Community, together with allied foreign governments, have monitored the FSB’s use of the Snake network to exfiltrate data from sensitive computer systems, including those operated by NATO member governments, by routing the transmission of these stolen data through unwitting Snake-compromised computers in the United States.

As described in court documents, through analysis of the Snake malware and the Snake network, the FBI developed the capability to decrypt and decode Snake communications. With information gleaned from monitoring the Snake network and analyzing Snake malware, the FBI developed a tool named PERSEUS which establishes communication sessions with the Snake malware implant on a particular computer, and issues commands that causes the Snake implant to disable itself without affecting the host computer or legitimate applications on the computer.

Today, to empower network defenders worldwide, the FBI, the National Security Agency, the Cybersecurity and Infrastructure Security Agency, the U.S. Cyber Command Cyber National Mission Force, and six other intelligence and cybersecurity agencies from each of the Five Eyes member nations issued a joint cybersecurity advisory (the Joint Advisory) with detailed technical information about the Snake malware that will allow cybersecurity professionals to detect and remediate Snake malware infections on their networks. The FBI and U.S. Department of State are also providing additional information to local authorities in countries where computers that have been targeted by the Snake malware have been located.

Although Operation MEDUSA disabled the Snake malware on compromised computers, victims should take additional steps to protect themselves from further harm. The operation to disable Snake did not patch any vulnerabilities or search for or remove any additional malware or hacking tools that hacking groups may have placed on victim. The Department of Justice strongly encourages network defenders to review the Joint Advisory for further guidance on detection and patching. Moreover, as noted in court documents, Turla frequently deploys a “keylogger” with Snake that Turla can use to steal account authentication credentials, such as usernames and passwords, from legitimate users. Victims should be aware that Turla could use these stolen credentials to fraudulently re-access compromised computers and other accounts.

The FBI has provided notice of the court-authorized operation to all owners or operators of the computers remotely accessed pursuant to the search warrant.

Assistant U.S. Attorney Ian C. Richardson for the Eastern District of New York is prosecuting the case, with valuable assistance provided by the National Security Division’s Counterintelligence and Export Control Section.

The efforts to disrupt the Snake malware network were led by the FBI New York Field Office, FBI’s Cyber Division, the U.S. Attorney’s Office for the Eastern District of New York, and the National Security Division’s Counterintelligence and Export Control Section. The Criminal Division’s Computer Crime and Intellectual Property Section provided valuable assistance. Those efforts would not have been successful without the partnership of numerous private-sector entities, including those victims who allowed the FBI to monitor Snake communications on their systems.

Timothy Martinez was convicted today by a federal jury in Brooklyn of all four counts of a superseding indictment charging him with attempted receipt of child pornography, possession of child pornography, and two counts of sexual exploitation and attempted sexual exploitation of a minor.  The verdict followed a one-week trial before United States District Judge Frederic Block.  Martinez is employed as a police officer by the New York City Police Department, and immediately prior to his arrest, was on active duty in the U.S. Army Reserve.  When sentenced, Martinez faces a mandatory minimum of 15 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations, New York, and Keechant L. Sewell, Commissioner, New York City Police Department (NYPD), announced the verdict.

“The jury found that the defendant not only violated the trust of the public that he was sworn to serve but specifically victimized vulnerable children for years.  Instead of using his position as a member of the NYPD to protect children, he shamefully gained the trust of minors in order to sexually exploit them,” stated United States Attorney Peace.  “Protecting children from sexual exploitation will always be a priority of this Office.  I commend the prosecutors and investigators for their outstanding work removing this predator from patrolling the streets and from our district.”

“When he swore his oath as a police officer, Timothy Martinez was entrusted to enforce the law and protect the innocent. Instead of upholding his oath, Martinez preyed on the young, turning innocent children into victims,” said HSI New York Special Agent-in-Charge Ivan J. Arvelo. “Our elation at this verdict is tempered by the pain and suffering these young victims endured as a result of this predator’s criminal actions. Those in positions of public trust are held to a higher standard as guardians of the innocent and HSI New York will continue to utilize every resource at our disposal to protect children from those who seek to do them harm.”

“Our police officers have a sworn duty to protect, but this defendant betrayed that oath and preyed upon some of the most at-risk members of our community,” stated NYPD Commissioner Sewell.  “Such reprehensible behavior is wholly unacceptable of anyone, especially a member of law enforcement. I commend and thank Homeland Security Investigations and the U.S. Attorney for the Eastern District of New York for their important work on this case.” 

As proven at trial, between October 2016 and March 2017, Martinez engaged in live video sex chats with Jane Doe #1, who had been treated for a brain tumor, and he convinced her to perform sexual acts.  Additionally, between September 3, 2012 and November 2016, the defendant engaged in live video sex chats with Jane Doe #2 and he similarly convinced her to show him her nude body and engage in sex acts even after she disclosed that she had been sexually abused by family members.  Martinez also possessed hundreds of images of child pornography.  In June 2018, the defendant attempted to receive numerous videos of child pornography from an individual he believed to be a minor. 

This prosecution is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by United States Attorneys’ Offices and the Department of Justice Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorneys William P. Campos, Marietou Diouf, and Chand W. Edwards-Balfour are in charge of the prosecution with the assistance of Paralegal Specialist Allison Henry.

The Defendant:

TIMOTHY MARTINEZ
Age:  43
Staten Island, New York

E.D.N.Y. Docket No. 20-CR-98 (S-2) (FB)

Earlier today, in federal court in Central Islip, Michael Montenes, the owner of M.S. Hi-Tech, Incorporated (MSHT), a Hauppauge-based distributor of electronic components, pleaded guilty to a criminal information charging him with bribery of a federal official in connection with a scheme to pay more than $18,000 to a Department of Energy (DOE) Procurement Officer in exchange for approximately $969,000 in DOE contracts. The proceeding was held before United States Magistrate Judge Steven L. Tiscione.  When sentenced, Montenes faces up to 15 years in prison.  As part of his guilty plea, Montenes agreed to forfeit approximately $969,000 and to pay DOE more than $1.8 million in restitution.

Breon Peace, United States Attorney for the Eastern District of New York, and Teri L. Donaldson, Department of Energy Inspector General, announced the guilty plea.

“Like the faulty components that he bribed a government official to purchase and caused damage to a Department of Energy laboratory, Montenes’s scheme has gone down in flames and he must now face the consequences for his crime,” stated United States Attorney Peace.  “This Office will continue to root out corruption that undermines the integrity of competitive bidding in the procurement process.”

Mr. Peace thanked the U.S. Department of Defense, Defense Criminal Investigative Service, for its work on the case.

“The Department of Energy, Office of Inspector General will continue to ensure that there is no place in our supply chain for bribery and corrupt schemes,” said Department of Energy Inspector General Teri L. Donaldson. “Anyone who suspects such conduct is encouraged to report it immediately. We appreciate the fine work of the U.S. Attorney’s Office and our federal law enforcement partners on this joint investigation.”

Between approximately December 2017 and December 2020, Montenes paid a Procurement Officer (Co-conspirator 1), who was employed at a DOE laboratory in Virginia approximately $18,800 in bribes to induce Co-conspirator 1 to enter into contracts for electronic components that MSHT, supplied to the DOE’s Virginia laboratory.  Montenes mailed these payments, which ranged from $500 to $7,200, from Long Island to Co-conspirator 1 in Virginia.  During the bribery scheme, Co-conspirator 1 awarded contracts worth more than $969,000 to MSHT, which represented 95% of all of MSHT’s sales to the DOE’s Virginia laboratory.  In July 2021, some of the electronic components that MSHT sold to DOE based upon Montenes’s bribes failed and caused a fire, resulting in approximately $1.8 million in repairs and other costs to DOE. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Bradley T. King is in charge of the prosecution.

The Defendants:

 Michael Montenes
Age:  61
St. James, New York

E.D.N.Y. Docket No. 23-CR-124 (JS)

Assistant United States Attorney Layaliza Soloveichik was among those recognized by Deputy Attorney General Lisa Monaco and Director Monty Wilkinson of the Executive Office for U.S. Attorneys (EOUSA), at the 38th Director’s Awards Ceremony today in Washington, D.C.  The EDNY was one of the districts represented at the ceremony, which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.

Breon Peace, United States Attorney for the Eastern District of New York, said: “Congratulations to Layaliza for receiving a Director’s Award for Superior Performance as an Assistant U.S. Attorney.  Layaliza’s vision, skill, and tenacity as a litigator and supervisor on behalf of the United States have enhanced the stature of the U.S. Attorney’s Office for the Eastern District of New York and furthered the mission of the Department of Justice.”

EOUSA Director Wilkinson said: “The recipients we honor today have shown remarkable resilience and commitment to justice through challenging times, rising to the occasion with unwavering dedication to their mission. They have worked tirelessly to protect the rights of Americans and exemplify the very best in federal service.”

Assistant United States Attorney (AUSA) Soloveichik was recognized for her exemplary performance in leading the district’s demanding civil immigration and programmatic practices, which consist of more than 1,500 cases.  AUSA Soloveichik serves as Deputy Chief of the Civil Division in the Eastern District of New York and previously served as Chief of the Immigration Litigation Unit.  She has also successfully managed a host of emergency litigation and programmatic challenges in cutting-edge cases of national significance.  AUSA Soloveichik has also taken on leading roles in defending challenges to national policies related to the COVID-19 pandemic as well as long-standing vaccine policies.

EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country.  For more information on EOUSA and its mission, visit http://www.justice.gov/usao.  For more information about the United States Attorney’s Office for the Eastern District of New York, visit www.justice.gov/usao/nye.

A four-count indictment was unsealed today in the United States District Court for the Eastern District of New York charging Denis Gennadievich Kulkov with access device fraud, computer intrusion and money laundering in connection with his operation of Try2Check, the primary service offering “card-checking” to cybercriminals in the stolen credit card trade. 

The Try2Check platform catered to cybercriminals who purchased and sold stolen credit card numbers in bulk on the internet, offering criminals the ability to quickly determine what percentage of the cards were valid and active.  As such, Try2Check was a primary enabler of the trade in stolen credit card information, processing at minimum tens of millions of card numbers every year.  Today, the U.S. government worked with partners in Germany and Austria to take offline Try2Check’s websites, thus dismantling the defendant’s criminal network.  Along with the indictment and global website domain takedown, the State Department has announced a $10 million reward for information leading to the capture of Kulkov, who resides in Russia.

Breon Peace, United States Attorney for the Eastern District of New York and Patrick Freaney, Special Agent-in-Charge, United States Secret Service (USSS), New York Field Office, announced the charges.

“Today is a bad day for criminals who relied on the defendant’s platform as the gold standard to verify that the credit cards they stole from hard working individuals living in the Eastern District of New York and across the world had value,” stated United States Attorney Peace. “Today’s indictment and global takedown of the Try2Check website demonstrates that the Office, together with our partners, will disrupt cybercrime operations no matter where they are based.”

“The individual named in today’s indictment is accused of operating a criminal service with immeasurable reach to fund further illicit activity with global impact,” said U.S. Secret Service Special Agent in Charge Patrick J. Freaney. “Our exceptional partnerships know no borders, and thanks to the cooperation and dedication of our global law enforcement community, Try2Check can no longer serve as a vehicle for continued criminal activity or illicit profits.”

As alleged in the indictment and other court filings, Kulkov created Try2Check in 2005, building it into a primary tool of the illicit credit card trade.  Cybercriminals who acquired large batches of stolen credit cards (for example, by hacking into credit card readers at stores) ran the cards through Try2Check to determine what percentage of the stolen credit card numbers remained active.  These cybercriminals then used the resulting data to show prospective buyers of the stolen credit card numbers what percentage of the cards retained their value.  Try2Check victimized not only credit card issuers and holders, but also a major U.S.-based payment processing company whose systems Try2Check misused to perform the card checks.  

Try2Check ran tens of millions of credit card checks per year and supported the operations of major card shops that made hundreds of millions in bitcoin in profits.  Over a nine-month period in 2018, the site performed at least 16 million checks, and over a 13-month period beginning in September 2021, the site performed at least 17 million checks. Through the illegal operation of his websites, the defendant made at least $18 million in bitcoin (as well as an unknown amount through other payment systems), which he used to purchase a Ferrari, among other luxury items. 

In coordination with the unsealing of the charging documents in this case, Try2Check’s websites were taken offline and the State Department issued a $10 million reward for information leading to the defendant’s capture.  If convicted, Kulkov faces 20 years’ imprisonment. The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.

The Office extends particular thanks to the Justice Department’s Computer Crime and Intellectual Property Section (CCIPS) and to CCIPS Assistant Deputy Chief James Yoon, for his and the Section’s extensive contributions to this case.  The U.S. Secret Service New York Field Office investigated this case with crucial assistance from the following Secret Service offices: the Global Investigative Operations Center (GIOC), the Cyber Investigative Section (CIS), Frankfurt, Paris, Madrid, and the Hague.  Crucial assistance was also provided by the FBI’s New York Field Office and Cyber Initiative and Resource Fusion Unit (CIRFU) and by Europol and the National Cyber-Forensics Training Alliance (NCFTA).  The Department of Justice’s Office of International Affairs is assisting with foreign evidence requests.  The Office extends its appreciation to the German Federal Criminal Police Office (BKA), the German Federal Office for Information Security (BSI), the Austrian Criminal Intelligence Service – Cybercrime Competence Center (C4), and the French Central Directorate of the Judicial Police (DCPJ) and the governments of Austria, Germany and France for their assistance on this case, as well as to the Shadowserver Foundation for crucial technical assistance in addressing Try2Check’s technical infrastructure.

If you have information regarding this individual, please contact the U.S. Secret Service at MostWanted@usss.dhs.gov.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Alexander Mindlin and Sara K. Winik are in charge of the prosecution, with assistance from Assistant United States Attorney Brian Morris.

The Defendant:

DENIS GENNADIEVICH KULKOV, (also known as “Kreenjo,” “Nordex” and “Nordexin”)
Samara, Russia

E.D.N.Y. Docket No. 23-CR-171

An indictment was unsealed today in Brooklyn charging two New York men for their alleged participation in a scheme to submit false and fraudulent claims to Medicare and Medicaid for medically unnecessary prescriptions and over-the-counter products that were not actually dispensed, to pay illegal kickbacks and bribes, and to launder the proceeds of their scheme. 

According to court documents, Taesung “Terry” Kim, 58, of Purchase, and Dacheng “Bruce” Lu, 44, of Great Neck, partly owned and operated four pharmacies:  888 Pharmacy Inc. and Huikang Pharmacy Inc., located in Brooklyn, and Elmcare Pharmacy Inc. and NY Elm Pharmacy Inc., located in Flushing. Between January 2015 and December 2022, Kim and Lu allegedly conspired with others to submit false and fraudulent claims to Medicare and Medicaid for dispensing pharmaceutical and over-the-counter products that were medically unnecessary, procured by the payment of kickbacks and bribes, or not provided. Further, Kim and Lu allegedly conspired with others who paid illegal kickbacks and bribes, in the form of cash and supermarket gift certificates, to Medicare beneficiaries and Medicaid recipients who filled their prescriptions at their pharmacies. Kim and Lu also conspired with others to pay and paid illegal kickbacks and bribes, in the form of rent and office staff, to the doctors who prescribed the medically unnecessary medications filled at their pharmacies.

Kim and Lu also are alleged to have laundered the proceeds of their fraud through shell entities to generate cash that they could disperse as unrecorded profits to themselves and the pharmacies’ other owners and to pay kickbacks to pharmacy customers. As part of the scheme, Kim and Lu’s pharmacies submitted approximately $29 million in fraudulent claims to Medicare and Medicaid.

Kim and Lu are charged with conspiracy to commit health care fraud, conspiracy to commit money laundering, and conspiracy to pay illegal health care kickbacks and bribes. If convicted, they each face a maximum penalty of 10 years in prison for conspiracy to commit health care fraud, 20 years in prison for conspiracy to commit money laundering, and five years in prison for conspiracy to pay illegal health care kickbacks and bribes.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Breon Peace for the Eastern District of New York, Assistant Director in Charge Michael J. Driscoll of the FBI New York Field Office, and Special Agent in Charge Naomi Gruchacz of the Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

The FBI and HHS-OIG are investigating the case.

Trial Attorney Patrick J. Campbell and Acting Assistant Chief Miriam Glaser Dauermann of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, comprised of 15 strike forces operating in 25 federal districts, has charged more than 5,000 defendants who collectively have billed federal health care programs and private insurers more than $24 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

An indictment was unsealed today in federal court in Brooklyn charging Taesung “Terry” Kim and Dacheng “Bruce” Lu with perpetrating a health care fraud scheme to submit false and fraudulent claims to Medicare and Medicaid for medically unnecessary prescriptions and over-the-counter products that were not actually dispensed, to pay illegal kickbacks and bribes, and to launder the proceeds of their scheme.  The defendants were arrested this morning and are scheduled to be arraigned this afternoon before United States Magistrate Judge Cheryl L. Pollak.

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Naomi Gruchacz, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), announced the arrests and charges.

As set forth in court filings, the defendants owned and operated four pharmacies:  888 Pharmacy Inc. and Huikang Pharmacy Inc., located in Brooklyn, and Elmcare Pharmacy Inc. and NY Elm Pharmacy Inc., located in Queens. Between January 2015 and December 2022, Kim and Lu allegedly conspired with others to submit false and fraudulent claims to Medicare and Medicaid for the dispensing of pharmaceutical and over-the-counter products that were medically unnecessary, procured by the payment of kickbacks and bribes, or not provided. Further, Kim and Lu allegedly conspired with others who paid illegal kickbacks and bribes, in the form of cash and supermarket gift certificates, to Medicare beneficiaries and Medicaid recipients who filled their prescriptions at their pharmacies. Kim and Lu also conspired with others to pay and paid illegal kickbacks and bribes, in the form of rent and office staff, to the doctors who prescribed the medically unnecessary medications filled at their pharmacies.

Kim and Lu allegedly laundered the proceeds of their fraud through shell entities to generate cash that they could disperse as profits to themselves and the pharmacies’ other owners, and to pay pharmacy customers as kickbacks. As part of the scheme, Kim and Lu’s pharmacies submitted approximately $26 million in fraudulent claims to Medicare and Medicaid.

The charges in the indictment are allegations, and the defendants are presumed to be innocent unless and until proven guilty.  The defendants each face a maximum penalty of 10 years in prison for conspiracy to commit health care fraud, 20 years in prison for conspiracy to commit money laundering, and five years in prison for conspiracy to pay illegal health care kickbacks and bribes.

Trial Attorney Patrick J. Campbell and Acting Assistant Chief Miriam Glaser Dauermann of the Criminal Division’s Fraud Section are prosecuting the case.

The Defendants:

TAESUNG KIM (also known as “Terry”)
Age:  58
Great Neck, New York

DACHENG LU (also known as “Bruce”)
Age:  44
Flushing, New York

E.D.N.Y. Docket Number: 23-CR-191 (ARR)

UPDATE

The defendant’s conviction for the conduct described in the press release below was vacated by the United States Court of Appeals for the Second Circuit on January 23, 2026.  See 20-CR-219 (DLI) ECF No. 169.

Today, a federal jury in Brooklyn convicted Paul Belloisi, an American Airlines mechanic at John F. Kennedy International Airport (JFK Airport), of all three counts of an indictment charging him with conspiring to possess cocaine, conspiring to import cocaine, and importing cocaine.  The verdict followed a one-week trial before United States District Judge Dora L. Irizarry.  When sentenced, Belloisi faces up to 20 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), and Francis J. Russo, Director of Field Operations, U.S. Customs and Border Protection, New York Field Office (CBP), announced the verdict.

“As proven, the defendant was caught red-handed trying to facilitate the smuggling of a large stash of cocaine hidden in an electronics compartment of the aircraft.” stated United States Attorney Peace.  “This corrupt airline mechanic not only abused his position of trust and undermined the security of a vital border crossing in our district, but was also willing to potentially endanger the safety of travelers as well as the community.”

“Not only did Belloisi violate the law by conspiring to traffic cocaine into the United States, but he used his trusted position as an American Airlines mechanic at JFK International Airport to facilitate his criminal activity,” said HSI New York Special Agent in Charge Ivan J. Arvelo. “Cocaine addiction is a serious problem throughout the country due in large part to the traffickers who place profit above the safety of others. HSI is committed to working with law enforcement partners to identify, arrest and prosecute those responsible for importing illicit drugs into the United States.”

“This case serves as a great example of collaborative law enforcement efforts to combat international narcotics trafficking conspirators. U.S. Customs and Border Protection thanks our partners at HSI and U.S. Immigration and Customs Enforcement for their continued cooperation,” stated CBP Director of Field Operations Russo.

As proven at trial, on February 4, 2020, American Airlines flight 1349 arrived at JFK Airport’s Terminal 8 from Montego Bay, Jamaica.  The aircraft was selected for a routine search by CBP officers from the JFK Airport Anti-Terrorism Contraband Enforcement Team.  The officers found 10 bricks of cocaine weighing 25.56 pounds—hidden inside an electronics compartment on the underside of the cockpit.  The cocaine was replaced with fake bricks and sprayed with a substance that glows when illuminated with a special light.  CBP officers and HSI special agents placed the aircraft under surveillance from a distance and shortly before it was scheduled to take off for its next flight, they observed Belloisi drive up and pull himself inside the electronics compartment.  Belloisi was confronted by law enforcement who observed his gloves glowing under the black light indicating he had handled the fake bricks.  Belloisi was also carrying an empty tool bag and the lining of his jacket had cutouts sufficiently large enough to hold the bricks.  The cocaine found in the aircraft had a street value of approximately $285,000 to $320,000.

The government’s case is being handled by the Office’s International Narcotics & Money Laundering Section.  Assistant United States Robert Pollack and Margaret Schierberl are in charge of the prosecution with the assistance of Paralegal Specialist Sophia Cronin.

The Defendant:

PAUL BELLOISI
Age:  55
Hicksville, New York

E.D.N.Y. Docket No. 20-CR-219 (DLI)